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Bush, Hu meet. Chinese-U.S relations and the global trade imbalance.

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A briefing, pegged to Chinese President Hu's visit to the White House.

THE WHITE HOUSE

Office of the Press Secretary

___________________________________________________________

For Immediate Release April 20, 2006

PRESS BRIEFING BY

DEPUTY NATIONAL SECURITY ADVISOR FARYAR SHIRZAD

AND NATIONAL SECURITY COUNCIL ACTING DIRECTOR DENNIS WILDER

ON THE PRESIDENT'S MEETINGS WITH

PRESIDENT HU OF THE PEOPLE'S REPUBLIC OF CHINA

James S. Brady Briefing Room

3:37 P.M. EDT

MR. JONES: Good afternoon, everyone. I'd like to welcome you to this briefing. It will be on the record with two people from the National Security Council. We have Deputy National Security Advisor for International Economic Affairs, Mr. Faryar Shirzad; as well as Acting Director for Asian Affairs of the National Security Council, Mr. Dennis Wilder. They're here to talk about today's meetings and events.

Q -- been demoted again? (Laughter.)

MR. JONES: Oh, pardon me. Acting Senior Director for Asian Affairs at the National Security Council. And they'll be talking about today's events and meetings.

MR. WILDER: Apparently, I've been demoted here.

MR. JONES: I'm sorry.

MR. WILDER: That's all right. (Laughter.)

President Bush and President Hu spent a lot of time together today, working through the many bilateral and international issues that you are well familiar with, but we will go into some detail on.

It was a very good meeting, set of meetings in the sense that these are very substantive discussions they're having now. As we told you on Monday, these two men have met five times in the last year, they've communicated by letter and phone to each other, they know each other quite well by now, they've very familiar with each other's styles. And so this is not a meeting where they needed to take a lot of time to figure out where they were going. They knew what they needed to cover and they did it very well.

I'll note one thing, that they had a long session in the Oval Office, a shorter session in the Cabinet Room, and at the end of the Cabinet Room session they realized that they were a little late for lunch with their wives, and they decided to do something unusual, which is to sit together at the table at lunch. And so during lunch they continued their substantive discussions.

White House protocol is normally that the Presidents sit at separate tables, but they decided that, because of the shortness of time of President Hu's schedule here in Washington and the need to continue to cover some of the very pressing international and economic issues that we have with the Chinese, that it would be a fruitful use of their time to continue discussions over lunch.

Let me talk a little bit about what we see as the key accomplishments of today. I think it's important to remember that today is only part of a package of meetings that we have been holding with the Chinese in the run-up to this summit. In other words, the JCCT, which we talked about with you on Monday, was very much a part of today's meeting because, if you look at the statements that were made both on the South Lawn and then in the press availability, the two leaders really talked in some detail about how are we going to work on the trade imbalances, how are we going to make this a fair playing field for Americans who want to do business in China, and Chinese wanting to do business in the United States.

And I think one of the most important things we saw, which is part of China's new five-year economic plan, is that -- well, the new five-year program, but a five-point plan in that five-year program is a decision to begin to move from the export-led economy that has served them so well over the last quarter-century, to a consumer-driven economy. And we've had quite detailed discussions in the run-up to this meeting with the Chinese about what that means.

When Senators Graham and Senator Schumer and Senator Coburn went to Beijing, the Bank Governor of China, Zhou Xiaochuan, presented to them a five-point plan of how China's going to move forward on a consumer-driven economy. And what they're talking about is lowering the savings rate. Today, as you may know, Chinese save perhaps at some of the highest levels in the world; 53 percent of their income, on average, is saved. And this is precautionary savings. It's savings against old age, where you don't have a retirement plan; or illness, because you don't have a health system that is as developed as some other countries. And what the Chinese are now talking about is how do we lower that? How do we start to make the Chinese people begin to spend on their own domestic economy in a way that is going to boost consumption and change this to a continental economy that stands on its own. In other words, another engine of real growth in the world economy. Much like the United States as a continental economy is an engine of growth, China begins to become much more of an engine of growth by the use of this five-point program to move Chinese away from all of the savings to more spending. And, of course, that spending is good for the Chinese people, because it will increase their standard of living over time.

I'll let Faryar, in a couple minutes, make a few more points about this. But it is very important, because I think some people today want to see a quick fix to the trade imbalance. And if there was one, believe us, we would have tried to get that by now with the Chinese. But in the new global economy, there is no quick fix. That's not the way this is going to work.

What we need, therefore, is structural change. And the Chinese are talking about, in two to three years, coming back into equilibrium as far as their global trade balance -- not the trade balance for the United States, necessarily, because that's going to take longer, but their global trade balance, as you know, has become a little bit out of sync, in the sense that they have over $100 billion in trade surplus with the world last year. And we need to see the Chinese start to change this so that, again, they become more of an engine, there is more consumption in China, more opportunities for foreigners to do business in China and to sell into the Chinese market. And the Chinese are recognizing that, and they're recognizing that this is an important role they play -- to use a phrase we've used a lot and you saw a lot today -- as a stakeholder in the international economic system, that they understand that the imbalances have got to be addressed. And we have done a lot of work with them to figure out how this will be done.

We'll set benchmarks. We know what it's going to take for the Chinese to do this. Faryar, again, as an economist, can tell you a little bit more about those in a couple of minutes. So, I would ask you to look beyond sort of saying, well, why didn't you get a big currency move today? The answer is, on that subject, that China's currency is beginning to move. It's important that it's started to move. The Chinese are beginning to use their new system for having a flexible currency. It's not enough, it's not nearly enough. We're disappointed with how slowly they've moved to use it, but over time we believe that they have the ability to use it more.

And one of the points I would make is, the Chinese, when we first talked about this last year, said, if we do this, we're worried it will slow growth. Well, the currency has moved over 3 percent in the last year; growth in the 1st quarter was 10.2 percent for the Chinese economy. I think it's hard to make a case that moving to this new flexible exchange rate has caused them some sort of dip in growth rates. In fact, growth is still extremely strong in the Chinese economy.

Let me move on to the key issues in bilateral and international relations that were discussed today. As the President said, the subjects of Iran and Darfur -- the Sudan -- and North Korea were key issues on today's agenda. On Iran, obviously we feel and the President told President Hu that China plays a key role in the Iranian situation. China has a relationship with Iran that we believe it can use to convince the Iranians that they must make the right decisions, that they must give up these nuclear ambitions they have and must come back into compliance with their obligations.

The President made a point of this, and said that we expected more help. The Chinese President explained what his diplomat, Cui Tiankai had been doing in Tehran this last week, explained that they, too, had exactly the same long-term goal, strategic goal, which is to get the Iranians back into compliance, and that they hoped that we could find a way forward that would work for everyone; that they, of course, are very keen on a diplomatic solution in this situation. And we said we wanted to work closely with them to find that diplomatic solution.

On the subject of North Korea, the President, obviously, very concerned about the fact that the North Koreans have not come back to the table for another round of talks since the 19 September agreement. We asked the Chinese to continue to work on the North Koreans, to have the North Koreans come to that strategic decision that they really need to make, that they need to give up their nuclear ambitions, they need to open up in the way that China has opened itself up since the 1970s.

And again, President Hu said he shared the same goals that the President shares on North Korea, that they want a de-nuclearized peninsula, that they are disappointed that the talks have not resumed at this point, and that they are doing their utmost to try and get the North back to the table.

The President also raised the issue of a North Korean woman who was sent back by the Chinese. And you know that we put out a statement on this subject a couple of weeks ago. He said that he felt that China needed to think about its obligations to these people, and its obligations under the U.N. charters that it has signed on to and adheres to, and that the plight of the North Korean people is extremely important. And we hope China can play a more positive role on dealing with North Koreans who are trying to find freedom.

On the subject of Sudan, the President made an equally impassioned plea on the subject of the violence unleashed by terrorists and extremists, and asked China to consider doing more to get the Sudanese government to come into compliance. Again, the Chinese leader agreed with the long-term goals, but was not in accord with everything we're trying to do in the short-term. But we are continuing those negotiations in New York at the United Nations. And we hope that we'll be able to see our way to a common understanding on the Sudanese situation.

Let me just mention a couple of other subjects very quickly. The President, in the area of trying to deepen the relationship between our two societies and our two cultures, offered to send the NASA Administrator to China to begin to talk about lunar exploration with the Chinese, to talk about some of the things we need to do in space -- for example, debris avoidance and other subjects. There are some things that the Chinese also have in terms of sensor technologies and information that we are interested in, in terms of global climate and other issues. So the NASA Administrator will probably go to China later on this year to begin to consult on the subject of space exploration and where we might have common interests and where we might begin to work together as the two nations on the Earth with the most ambitious space programs in the 21st century at this point.

Faryar, do you want to add anything?

Q Can I ask you a question on the topic before you do that?

MR. JONES: We'll take questions right at the end.

Q I'm sorry -- it's just about what was the Chinese President's reaction to the request regarding the North Korean woman? You didn't say what they said back.

MR. WILDER: I'm sorry. On that particular issue, I don't recall that he addressed that. He listened to the President, he took in what the President had to say, but he didn't make a specific response to that particular point.

MR. SHIRZAD: Just to reiterate some of what Dennis said regarding the economic aspects of the relationship. As we talked to you about when we briefed you on Monday, the economic issues are obviously an enormous part of the lens through which the American people look at the health of the bilateral relationship. And so we worked very hard in the lead-up to this meeting between the two leaders to be able to use this meeting between President Hu and President Bush as a way to demonstrate that that bilateral economic relationship is one that provides more balanced benefits to both sides.

And so, in the broad set of events that have occurred in the context of this particular visit, we feel like we've made some very good progress on addressing a number of key economic priorities, many of which were part of the deliverables that we reached and were able to obtain over the course of the Joint Commission for Commerce and Trade meetings that our Secretary of Commerce and U.S. Trade Representative chaired on our side, and Vice Premier Wu Yi chaired on the Chinese side.

In terms of the meetings here today, the point that Dennis made I think is the one worth most underscoring, and that is the commitment that China's President made regarding their intent to move towards a consumer-based economy. We have talked to the Chinese for quite sometime about a number of issues on the trade side, with regard to opening their market, abiding by WTO commitments, living up to intellectual property protection obligations that they've undertaken, to move to more flexibility with regard to their exchange rate, and to undertake the necessary structural reforms in their economy to deal with the fact that they are an increasingly mature and prominent contributor to global growth.

And in all those respects, I think what we heard back today from President Hu was reiteration of a very important plan that the China Central Bank governor announced on March 20th and which was enshrined, as Dennis mentioned, in the five-year program that the National People's Congress put out last month, and that is a comprehensive plan with a time frame attached to it to move their economy from a export-based economy to a consumer-based economy. And so the elements of that five-point plan in terms of increasing domestic demand, reforming their pension system so that the precautionary savings that Dennis talked about become less necessary for the Chinese people, more flexibility in the exchange rate system, more market access and increased imports are now part of a comprehensive program that the Chinese have now adopted and their President has articulated as a goal for their economy, here on the South Lawn.

In terms of the particulars, as Dennis said, we were not looking for this meeting itself to do anything more than achieve the biggest sort of policy objective we've had in the Chinese relationship, and that is to advance them towards undertaking the necessary structural reforms to create a more level playing field in our economic relationship with them. And I think we've been able to do that.

Just a couple of areas that Dennis didn't mention. There was discussion about energy, which is a common challenge of the two countries. There was also a discussion about cooperation on dealing with the challenges of avian influenza and potential pandemic.

Q President Hu mentioned the currency issue. He said he wanted to do something about it. Did you see that as a promise to reform the currency at some point soon? And did the President ever mention there could be trade repercussions if the Chinese don't act on this?

MR. SHIRZAD: I think the Chinese understand well the political context in which the currency issue is seen here in the United States. I think the words that President Hu used was actually "reform." I think what -- if I remember correctly, he actually specifically said that their goal is to further the reforms of their exchange rate system.

What they did on July 21st -- and the President alluded to this -- was a very important step forward, both in terms of moving away from the dollar peg, but also in laying out a policy framework for how they intend to manage their currency going forward. And I think we take away from China -- what President Hu said today is, a renewed commitment at the highest levels to continue to move, and hopefully more quickly towards achieving what they announced they wanted to do on July 21st, and that is to have a more market-driven exchange rate regime.

Q Do you take today's commitment any more seriously than the one that was made a year ago and that you don't feel has been fulfilled?

MR. SHIRZAD: Well, it's been fulfilled in the sense that they've begun to allow the exchange rate to move -- the degree of movement has been extraordinarily slow. We've been very clear in saying that the process of moving to full flexibility in their exchange regime is something that will take some time. But at the same time, we've said the progress that's been made to date has been insufficient and that they do need to move more quickly.

I think what's significant, in terms of what happened today, relative to what happened on July 21st, is that you had a statement articulated by China's President personally, which in the Chinese system, is an important distinction.

Q Didn't he say the same thing when the President was in China?

MR. SHIRZAD: He may have. Frankly, I just don't remember. But a rearticulation by the Chinese President of a commitment, particularly as a part of a broader framework of policies that they want to implement towards moving their economy away from an export-led economy to a domestic consumption-based economy, is significant, in our view.

Q What you've outlined are not major breakthroughs here, this was a lot more about kind of the choreography of the day. And a major wrench was thrown into that with this protestor. Can you explain a little bit the reaction of the Chinese, which we understand was not great?

MR. WILDER: At the outset of the meeting in the Oval Office, the President expressed to the Chinese President his regret that, unfortunately, an individual made the decision that she was going to disrupt the speech given by the Chinese President. The Chinese President was gracious about that, and frankly, we moved on into the very important substantive areas and it never came up again between the two Presidents during the course of the day that I know of.

Q Did the President actually apologize for that? Is that the word he used?

MR. WILDER: He just said this was unfortunate, and I'm sorry this happened.

Q Can you amplify a little bit on whether it's your feeling that the Chinese delegation will accept that as an answer, whether they will really believe that it was unintentional? And how serious a gaffe was this for all of you who have been working so hard on these other difficult issues?

MR. WILDER: Well, first of all, we have worked very hard with the Chinese on making sure that the delegation is secure, protected. They've seen our efforts in this regard. You, of course, know of the barriers placed up to make sure that Blair House is protected. And we certainly make every effort to treat our guests well. I think the Chinese understand that.

Obviously, there is a tension in the Chinese system that goes well beyond today over the issue of the Falun Gong. And so I'm not going to stand here and tell you that they were at ease with this situation. But I would be extremely surprised if the Chinese blame us for this. This is an individual who abused the rights of being in the press corps. Reporters in this situation aren't supposed to be making news, they're supposed to be reporting the news. And this particular individual made another decision. I think it's a momentary blip. I'm not too worried about it.

Q So may I follow? Demonstrations just outside, the first time I've seen such a large-scale demonstration against the Chinese leaders visit in Washington, including religious and political. And they were Chinese and also people whose land and rights are being occupied by China -- so what President -- do you think both Presidents got any message that how people are frustrated, that how they are being persecuted in China? They are ready and they want freedom in China.

MR. WILDER: First of all, the people protesting have every right to be out there. They have every right to express their views. We do nothing to stop them from exercising their rights of free speech here in the United States.

The President -- President Bush talks to President Hu about the subject of freedom of religion, freedom of assembly, freedom to worship. And so that subject came up again today -- not in the context of the specific individual, but in the more general context that we continue to believe that there are -- that China has some way to go on this area, that a modern society that has moved as far as the Chinese have economically must begin to provide these kinds of freedom to their people.

The President, I might add, also raised the issue of Internet freedom in China, and the fact that the Chinese need to be careful about how they restrict the use of the Internet, that this is an important thing -- again, in a modern and free society.

Q Can I just follow, please? I mean he should -- as far as India, Pakistan, or any issue as far as South Asia is concerned --

MR. WILDER: As we signaled on Monday, the President did bring up the subject of the new civil nuclear deal with India. He explained that this deal was designed, intended to help with the fossil fuel situation in the world; that if we are going to find a way through this difficulty we all know we are facing, in terms of the -- that there are limits on that supply, that we have to start moving to alternative energy sources, and civil nuclear is an obvious and excellent choice, and a safe choice these days.

And so the President explained that; explained also to the Chinese President that we aren't engaged in some sort of zero-sum game between China and India, that our goal in moving forward with India is a stable relationship that is not designed as some sort of counter.

Q What were President's Bush and Hu reaction to House Minority Leader Nancy Pelosi's statement, "Today President Bush will roll out the red carpet for Chinese President Hu, a leader whose government brutally crushes freedom, democracy and the religious expression of the Chinese and Tibetan people"?

MR. WILDER: I have no idea what their reaction to that is. I have not talked to either of them about that particular --

Q What is your feeling?

Q What was his reaction when -- what did the President say when he brought up the issues of Falun Gong and all of that, and what was President Hu's reaction to what President Bush said?

MR. WILDER: First of all, the President did not bring up Falun Gong. Let's be clear; we didn't discuss any specific --

Q But human rights issues.

MR. WILDER: But human rights issues, okay. You know, I found it interesting that in his statement in the Oval Office, the Chinese President said something about democracy that I haven't seen before. And he said that, if there is no democracy, there will be no modernization. And he said, expanding the democracy and freedom for the Chinese citizens is one of our goals. That is a very interesting statement, because I don't think I have seen a Chinese leader quite so distinctly make a link between the modernization program and democracy.

I think that President Hu has heard from the President enough on this subject that he's starting to think about it. Does that mean we're going to see rapid change in China? Absolutely not. Does it mean that the Chinese are beginning to understand that there's a linkage between stability in a society and the freedoms? I think we're starting to see some glimmers. I hope we are.

Q Was there any progress regarding Iran and the U.N. Security Council economic sanctions, the possibility? Was that even part of the discussion?

MR. WILDER: Those discussions are taking place in other contexts. We had Nick Burns, of course, in Moscow discussing this not only with the Chinese, but others. There are continuing discussions up at the United Nations on this subject. Today was more a discussion of we need to work together, making sure we were in agreement on the broad goals and how we need to deal with the Iranian situation. But as far as the specifics of what the next step is, they really didn't get into that.

Q President Hu has been reluctant in the past to take questions alongside President Bush. At what point was the decision made to take questions today at the pool event? And was there any resistance to that?

MR. WILDER: First of all, this visit has been planned ever since last summer, so we've had a lot of discussions about a lot of different parts of this because it was actually a September event. But in the run-up if I can remember, we did have a discussion at the working levels about how would we deal with this. And the Chinese decided they were comfortable with a couple of questions at the end of the Oval Office session. And so that's the decision we made. This was made I would say weeks ago.

Q Sir, did they discuss Russia or any post-Soviet countries in Central Asia, maybe in the context of the Shanghai Security Organization, something like that?

MR. WILDER: They did discuss for a couple of minutes the subject of the Shanghai Security Organization. And President Bush asked some questions about where was that organization going; what did President Hu see as the purpose of the organization. You will recall that last summer there was a statement that we found from the Shanghai Security Organization that, frankly, we found perplexing and a little disturbing. And the President asked President Hu about that, and asked about where did he see that organization going in the future.

President Hu, I should say, assured the President that the SSO is not an anti-American organization, and that their goal is more on the economic side and antiterrorism. And we were glad to hear that.

Q If the President ultimately favors markets to determine currency values, why did he say he wants the Chinese currency rate to rise?

MR. SHIRZAD: I think there's no doubt that the Chinese currency is artificially depressed in terms of its value. They intervene very heavily in the currency markets. Witness the fact that they just succeeded Japan as the world's largest holder of U.S. Treasuries. That's in large part because they're out there buying dollars and putting out their Chinese currency, in part, to keep the currency at a low level. So I don't think there's much of a debate that the currency is artificially under-valued. I think what the President is saying is what we've said consistently, and that we want the market to be a stronger factor in determining the value of their exchange rate.

Q On the discussion on North Korea, since the last time that the two men met, President Hu has been to North Korea, the North Korean leader has been to Beijing, and the six-party talks have not reconvened and fundamentally appear stalemated. Did President Hu indicate what he had heard from Kim Jong-il? And did he in any way urge President Bush to come up with a more concrete plan of incentives for the North Koreans?

MR. WILDER: I'm a little reluctant to say because I know there was a discussion at lunchtime that I was not privy to. And so I'm going to be very careful that I can't tell you exactly what was said at lunchtime on the subject. I know it was something they continued the discussion on because it's such an important issue.

But in terms of what was said in the Oval Office meeting about this, President Hu expressed his frustration that the talks have not reconvened, and that he would like to work with us to try and find a way forward. He told the President that he had been working very hard on this issue, and that he was eager to see the talks reconvene, and that we need to find a way to do that.

Q Did he suggest any concrete steps on the United States' part?

MR. WILDER: He did not suggest any particular concrete step. He alluded to the fact of the defensive measures that we have put in place, and suggested that the North was a little disturbed by those measures, but he didn't say, you need to end those measures, in any way, shape or form. He simply said that the North has indicated this was an impediment, from their point of view.

Q A question maybe for Faryar. President Hu, in his speech in Seattle, outlined five or six areas where he'd like to see more regular discussions. He didn't use the word "framework," I don't think, but he mentioned energy and trade and all sorts of things. I guess I'm a little surprised that there's not an announcement here that the U.S. would be receptive to that, and would be exploring something like that. Can you talk about that? Is that an idea that's still alive and needs further discussion, or is it not something the U.S. wants?

MR. SHIRZAD: I think you can go back to the 2003 visit of Premier Wen, at which there was a lot of discussion about the frameworks that we used to -- in our bilateral engagement with the Chinese. And what the Chinese have always said to us, and Premier Wen said in 2003, and I think it's echoed in what you heard in Seattle, is that there are mechanisms of dialogue that the Chinese find extraordinarily important, in terms of taking issues of interest and funneling them through more formalized mechanisms for discussion. We have a number of dialogues going on with them -- the JCCT, this Joint Committee on Commerce and Trade, I talked about is one. There's the Joint Economic Commission that our Treasury Secretary chairs with his counterpart on the Chinese side. There's the strategic dialogue that Bob Zoellick chairs. There's a number of these mechanisms that we have, and we're also open to either deepening the dialogue or finding new topic areas. So I don't think it's a matter of needing to find a new mechanism for these issues, it's a matter of taking those issues and making sure we make substantive progress.

Q A question on Taiwan. The President said today -- President Bush said today that no corrective action or a changing of status quo from either side. When the Taiwanese leadership announced the Unification Council, which has been in place for more than a decade, will cease to function, do you view that as provocative or changing the status quo? If it's not, what then, is?

MR. WILDER: We did not, in any way, make a determination if that was a change to the status quo. The President of Taiwan, under his executive powers, had the ability to place that organization in abeyance. That's a decision he chose to make. It's not a decision that we particularly thought was going to advance the cause of peace and stability on the Taiwan Strait, but we understood that this was something he felt strongly about doing.

In terms of altering the status quo, the Taiwan President, I think recently in a French magazine interview, has reiterated his pledge to the Four Nos. I think that's a very positive sign. We are going to hold them to that pledge. We believe those pledges are important to maintaining the status quo. And at this point, the President today made a very strong statement about where he is on Taiwan, clear and consistent position. And the Chinese President, I think, appreciated that.

Q Follow-up. Sir, the President said during the press availability that he did not support Taiwan independence, whereas President Hu said that the President told him that Mr. Bush opposes Taiwan independence. As you know, there is some kind of a nuance there, oppose and support. Could you tell us what the President actually said to President Hu? Does he not support or oppose?

MR. WILDER: The President today, in every time he mentioned the subject, said he does not support Taiwan independence.

Q Any more information on this heckler? Was it appropriate for her to be admitted? Is she a real journalist? Do we know why it took so long to shut her up?

MR. JONES: I'll address that. She is, in fact, an accredited journalist to The Epoch Times. She faxed a petition to enter the event. We had had her Social Security number, date of birth, all the appropriate information. We looked into that, whether or not she was a legitimate journalist. She was, and she was admitted entry.

Q What was the publication?

MR. JONES: Epoch Times. E-P-O-C-H T-I-M-E-S.

Q On the Pacific region, was there any discussion of the tensions between Japan and China? Anything about Prime Minister Koizumi's visits to Yasukuni? Anything like that?

MR. WILDER: That did not come up.

Q On what topic would you say the most progress was made today?

MR. WILDER: Again, as Faryar has said, the big topic for us is really this commitment that the Chinese understand that structural change of the Chinese economy is a very important step. You know, if you look back at American history, we had a high savings rate at one point, too, in the early 1900s.

Q Then we got MasterCards.

MR. WILDER: That's it. And we're doing well. (Laughter.)

Q Yes, right.

MR. WILDER: Are you suggesting the Chinese shouldn't get MasterCards? (Laughter.)

Q That's the area the most progress was made on? We know it's the most important topic, but is that the area today where the most progress was made?

MR. WILDER: I think having the President of China at the White House, on the White House lawn, making this kind of a commitment to a vision of China's future as an economic power, is a very big statement. And I've followed China for 25 years, and I'll tell you, when they do a thing like this and make a statement like that, it is important. He would not say it on the lawn of the White House if he was not going to commit to making these changes.

Q Did they discuss the Kosovo issue, since China is playing a very close role at the -- in the Security Council?

MR. WILDER: That issue -- first of all, we had two hours this morning, and there were lots of issues that we could have discussed. Unfortunately, that didn't come up.

Q Not at all?

MR. WILDER: Not at all.

Q The role of the Chinese government in the six-party talks -- Chinese government didn't improve their own human rights condition. How does the United States trust the Chinese government can convince North Korea? The United States continues convincing -- I mean, trusts Chinese government can in the six-party talks?

MR. WILDER: Well, first of all, China's interest in a denuclearized peninsula, and peace and stability in Northeast Asia I think is pretty self-evident. The Chinese do not want to see the region become nuclear, and they certainly understand that this is a destabilizing factor in an area on their border. So we feel the Chinese are quite sincere in our discussions with them that they want to work on this problem with us. The North Koreans are not the easiest of people to deal with. The North Koreans are very strong-headed about what they're doing and how they're doing it, but I think the Chinese are trying very hard.

The visit of the North Korean leader to China was, in part, an attempt by the Chinese to demonstrate the benefits of opening the society, changing the society. After all, China was able to change the society, and it did not lead to a disruption of the sort that perhaps the North Koreans fear. So I think the Chinese self-interest here is a motivator, whether or not you trust all of their motivations.

Q I'm wondering. You said that President Bush would bring up China's non-transparent military build-up, and the expansion opposite Taiwan. Did he do so? And what did President Hu say?

MR. WILDER: We did talk a little bit about that today in the context of the military-to-military relationship between the United States and China. I think we are going to see some new visits back-and-forth between military leaders. And there was discussion of Secretary Rumsfeld's successful visit to China last year. I think we'll see a return visit, probably by the head of China's Second Artillery Corps, sometime in the near future. That's their version of the strategic rocket forces. I think that it's important to continue to try and press them on transparency through having those kinds of dialogues. So, yes, the subject was raised, and there was some forward movement.

Q Was there enough from this meeting -- there's plenty of anti-China sentiment on Capitol Hill -- was there enough from this summit to try to tamp that down? And what would you point to as a result of this meeting to try to reduce some of that anti-China sentiment? And on a related note, does the White House have a position on the Grassley-Baucus legislation that would make it easier potentially to crack down on China's currency --

MR. SHIRZAD: What we were hoping to do with this visit is to get real results on the various economic issues that continue to frustrate a lot of observers of the trade that we have with China. I think as Dennis and I have both said, we felt we made important progress in terms of the commitment that was articulated and how it was articulated, and the fact that it was articulated here on the South Lawn. But the degree to which it has an impact on Congress or on the perceptions of the American people really ultimately depends on follow-through. I think the President alluded to that in the press availability they did after they did their first meeting in the Oval Office. And that's a consistent theme when we talk to the Chinese, that the commitments are important, and certainly the commitment that President Hu made today is particularly important. But in the end of the day, it's a matter of what kind of follow-through there is and what kind of results we see. And that's really where our focus is. And I think that will be where we'll find the answer to your question about what impact it will have on Congress and elsewhere.

In terms of Grassley-Baucus, we have not yet taken a position on it.

Q Did the two Presidents discuss anything in terms of the environment, in terms of the clean air deterioration in China and the global impact it may have in the future?

MR. SHIRZAD: Dennis may have more than I because he was privy to some of the discussions I was not privy to. But there was discussions about the climate issue in the context of the Asia Pacific Partnership, and in the context of the energy issue that Dennis alluded to. We actually have brought China in as a founding partner in the Asia-Pacific Partnership on Clean Development and Climate, which is an initiative that we have undertaken with six countries altogether to advance cooperation on energy issues, climate issues, and environment issues. And that was a part of the discussion that we had today.

Dennis, I don't know if you have more.

MR. WILDER: That's where we were.

Q Did President Bush express any concern about what the Pentagon says is this huge military build-up going on across the Taiwan Strait? You sort of suggest that he didn't really say much about it.

MR. WILDER: Well, I think if you look at the statement the President made on the lawn and he talked about both sides needing to be careful about their actions, that certainly was a reference not only to any actions that may take place on Taiwan, but also about the military situation.

The Chinese know where we stand on this. I can point you to the National Security Strategy that we put out that the President signed and read and edited in March. We have the Quadrennial Defense Review that made allusions to this subject. So I don't think that at every meeting he's got to go through all the details. We certainly have an ongoing discussion with them about this. They know of our concerns about the situation on the Taiwan Strait. And as I say, the President did make allusions to the fact that both sides need to be careful about what they're doing there.

Q Based on what you heard today, is it still possible that the Treasury Department in its currency review could label China a currency manipulator when that review comes out later this -- in a few weeks?

MR. SHIRZAD: Well, remember, the framework that Treasury uses to make its determination is laid out in the statute, and it's very much of a decision for Treasury to make. They have not yet, as you know, issued their report. But in terms of how they want to make their decision, and analytically, whether anything that occurred today affects that outcome I think is really for them to say.

Q Did that specific topic come up, do you know? Did the Chinese President raise that issue or did that come up?

MR. SHIRZAD: There was no specific discussion that I saw about the exchange rate report, but the exchange rate issue came up repeatedly over the course of the day, both in terms of the President's statement on the South Lawn, President Hu's statement on the South Lawn. It came up in the course of their press availability after their initial meeting in the day. It's an important issue, and it's permeated the discussions during and around the visit, since we've been -- over the last week and beyond.

Q Did President Bush mention any individual case, for example, the New York Times reporter, Zhao Yan --

MR. WILDER: The President brought up a list that he had provided in New York at the United Nations. You'll recall that because the September visit was postponed because of Hurricane Katrina, they met on the margins of the U.N. General Assembly.

The President talked about that list again. He did not go through the names that we had on that list, but certainly the Chinese know exactly which list he is referring to. I'm not in a position to tell you exactly who is and who isn't on that list. It's, obviously, a sensitive issue for families and I think the point of the list is that it's a representative list of the kinds of cases that we think the Chinese government needs to take a more positive position on.

Q You mentioned that the President brought up the issue of the North Korean woman. Did he have any larger proposals about China's dealing with North Korean refugees?

MR. WILDER: Yes, in the sense that what we would like to see the Chinese do, put a process in place that we are all comfortable with for processing people who come across that border. Obviously, the way the Chinese dealt with that particular case was non-transparent. Their obligations under the U.N. charters that they have signed are to have a process in place that is understandable. Right now, we don't understand the process they use to make those determinations, and this was an individual, you will remember, that had family in South Korea, would have been easily resettled. And so we were confused by the Chinese decision here. The real thing the President asked for is a transparent process.

Q You mentioned that energy came up, and that the two Presidents discussed it as a common challenge to the two countries. I was wondering if you could be a little more specific as to how the energy issue was discussed, and then within that, if Iran came up in that context?

MR. SHIRZAD: What they talked about, and it's a theme that they've, I believe, have talked about before, but certainly the two governments have talked about, is the fact that both China and the United States are enormous energy consumers. China, in particular, as an emerging economy, has rapidly increasing energy demands to fuel its economic development and its economic growth. Part of what they talked about -- part of what the President mentioned is something that he's mentioned before, and that is the importance of diversifying away from oil and using other technologies, including nuclear, as an answer to the energy challenges that a country like China has.

In terms of any specific linkage to Iran, I don't believe there were any drawn, unless there was something in your section.

MR. JONES: Thank you.

END 4:26 P.M. EDT


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Lynn Sweet

Lynn Sweet is a columnist and the Washington Bureau Chief for the Chicago Sun-Times.

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This page contains a single entry by Lynn Sweet published on April 21, 2006 9:53 AM.

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