Mr Hu goes to Washington (after he's seen Bill Gates and the Boeing factory)

The Times  April 19, 2006 From Jane Macartney in Beijing and Tom Baldwin in Washington

THE leader of the world’s most populous nation was warmly welcomed to America last night by the world’s most influential man.

President Hu Jintao was guest of honour for a lavish banquet at Bill Gates’s Seattle lakeside mansion on the opening night of what China is calling a four-day “state visit”.

But when the Chinese leader arrives in Washington for talks with President Bush tomorrow — after first stopping off at the Boeing plant — he will find that the social temperature has, deliberately, dropped a few degrees. He will, for example be offered only a “social lunch” during what the White House insists is merely “a visit”.

Such diplomatic nuances reflect the highly strung relationship between the countries. While Communist China has become a powerhouse capitalist economy with which America has no choice but to do business, the US remains deeply wary of its emerging rival.

President Bush describes Sino-American relations as “complex”, the State Department says China must become a “responsible stakeholder” in the world community, and the National Security Strategy says the US “seeks to encourage China . . . while we hedge against other possibilities”.

The chief pressure points include the undervaluation of the yuan — which has exacerbated the vast trade imbalance between the countries — and the enormous economic leverage China now has over America through its purchase of $262 billion (£147 billion) of US Government debt. Other contentious issues include human rights, Taiwan, and Iran.

“When we write the briefing memo for the President the one for the China visit is always the longest because we can never seem to boil it down to one or two issues,” one senior official said. The Chinese hope that this visit can help to allay such concerns. According to the state-run China Daily: “Hu’s trip is set to clear US minds of doubts and suspicion.”

Last night Mr Gates was expected to serve his 100 dinner guests a three-course meal including Alaskan halibut and spot prawns and a dessert of rhubarb brown butter almond cake. President Hu, like any good guest, was keen to ensure that he did not arrive empty-handed at the Microsoft founder’s home.

The meeting was intended to seal the peace between Communist China and the capitalists of Microsoft, who have been complaining about the theft of their software. The Chinese Government has ordered that all new computer sales must have licensed software installed before leaving the factory in an effort to crack down on piracy. As a result, PC manufacturers intend to spend more than $400 million on Windows software over the next three years.

And in a display of chequebook diplomacy, the Chinese Government has signed 106 contracts worth $16.2 billion with US companies this month.

China has also promised to introduce a three-year plan to begin balancing its global surplus. The US Treasury has, in turn, delayed publication of a report into whether China is a “currency manipulator” until after President Hu’s visit.

But US anger over what many see as a job-destroying trade deficit, which grew to a record $202 billion last year, is unlikely to be silenced for long. Mr Hu, unused to considering the views of elected politicians, may have underestimated the strength of feeling in Congress and growing frustrations within the administration.

Robert Zoellick, the US Deputy Secretary of State, has described the pace of Beijing’s currency reforms as agonisingly slow and the Senate is due to consider an oft-delayed Bill that would impose import tariffs of 27.5 per cent on Chinese goods if the yuan is not allowed to float freely.

The US view that China, as an aspirant superpower, should shoulder more responsibility on the world stage is bound to surface this week. China, one of the five permanent members of the UN Security Council, has so far lined up with Russia to thwart punitive measures against Iran.

Mr Hu will have demands of his own: he will ask Mr Bush to use his influence to restrain the independence ambitions of Taiwan, which Beijing regards as sovereign territory.

The White House played down the reasons why Mr Hu was not getting a full state visit, saying simply that Mr Bush, who likes to be tucked up in bed by 9.30pm, does not like long, drawn-out state dinners.

“Each visit to the White House is unique and follows different substantive and social formats,” a spokeswoman said. This one will include a full 21-gun military salute and accommodation at Blair House, where other world leaders stay.

Mr Hu, with his reserved, self-contained nature, is unlikely to create much of a personal bond with his US counterpart. But the Chinese President, still consolidating his position after three years in the job, is playing to a domestic audience and wants to be seen on television receiving the honours accorded to his predecessors.

There are some who believe that by insisting on as much pomp as possible, Mr Hu has missed a chance of more fruitful talks. Ralph Cossa, of the Pacific Forum Centre for Strategic and International Studies, said: “Bush offered to Hu: ‘Come to the ranch, or to Camp David, where we can roll up our sleeves and talk’. The Chinese went for show over substance; they are missing an opportunity to work on the chemistry angle.”