For state, Chinese leader’s visit is an easy sell

In Washington state, China rocks.

In Washington, D.C., China skates, or tries to anyway.

At Boeing Co.’s Everett assembly plant, Chinese President Hu Jintao embraced worker Paul Dernier, a gesture of friendship that had the 777 manufacturing supervisor briefly in tears.

By comparison, Hu’s reception in Washington, D.C., was arm’s length. The Bush administration withheld some of the courtesies normally afforded a world leader. No state dinner, for example, just lunch. And the public exchanges on issues important to both countries were temperate.

Even the demonstrators were more raucous.

U.S. grievances against China start with that nation’s reluctance to float the value of the yuan against the dollar. The Chinese last year implemented a complicated formula that was supposed to soften rigid valuation of its currency, but the yuan has fallen only 3 percent. Some economists and members of Congress say 30 percent would more fully true-up exchange rates. A cheap yuan keeps the cost of Chinese goods sold in the U.S. low, and raises the cost of U.S. exports. The result in 2005 was a $202 billion trade imbalance, and growing pressure in Congress to impose tariffs — a blunt instrument that would probably be struck down by the World Trade Organization.

China’s currency holdings are rapidly approaching $1 trillion, with every dollar increasing the risk of destabilizing its domestic economy, and the world’s as well. Economic growth surging ahead at the rate of 10 percent a year has Hu and other Chinese leaders nervous. If you’re asking why you should care, consider that the Chinese are now second only to Americans in their thirst for oil. They are using their buying power to tie up world oil reserves, which has a direct effect on what we pay for gasoline.

The other major economic irritant is China’s fitful enforcement of intellectual property protections. Counterfeiting is a way of life. And the knockoffs of U.S. software, movies and music not only deprive producers and artists of their rightful revenues from sales in China. More and more of that stuff has been exported, adding to the losses suffered by the rightful owners.

China’s reluctance to be as helpful as the Bush administration would like addressing the nuclear threats posed by North Korea and Iran has added to the tension between the two governments. And the Chinese do not even acknowledge their dismal record on human rights.

The Chinese can be vague about what commitments they will make, and sometimes forgetful later following up.

But for Washington state residents, the news from China has been almost all good in recent weeks, with Hu’s two-day visit bringing new focus to the unusually strong ties between Beijing and Olympia or, more accurately, Boeing plants at Renton and Everett, and Microsoft Corp.’s Redmond headquarters.

The Chinese government now requires makers of personal computers to install licensed software at the factory. Pre-loading Windows or other programs will short-circuit at least some piracy. Deals signed so far may eventually produce more than $1.5 billion in revenues for Microsoft.

Chinese airlines have been among Boeing’s most reliable customers, with a recent order for 80 Renton-built 737s timed to underscore the importance of that relationship. Hu’s projection that his nation will need 2,000 new airplanes over the next 15 years drew cheers from workers in Everett. Boeing Commercial Airplanes Chief Executive Alan Mullaly responded with the comment “China rocks.”

Still, there is the concern among workers that Boeing could outsource more production to China.

Two other Beijing initiatives should also work to our advantage. The Chinese have agreed to eliminate a ban on imports of U.S. beef imposed after a December 2003 incidence of mad cow disease.

Even if Washington ranchers and packers do not sell directly to China, they will certainly benefit indirectly from increased international sales of U.S. beef.

Also, the Chinese say they will soon permit individuals to convert as much as $20,000 worth of yuan into foreign currency. The limit now is $8,000. And Chinese banks, insurers and investment managers will be allowed to buy more foreign assets.

Washington is as well-positioned as any state to benefit from this increased flexibility.

Gov. Chris Gregoire says Hu responded positively to her suggestion that China open a trade office in the state. She and former governor Gary Locke, through trade missions and other contacts, have diligently courted the Chinese. A permanent Washington presence would be a coup.

What better place to demonstrate cooperation as one superpower and its emerging competitor work through the issues that divide them?