Hu ‘bullish’ in Everett

EVERETT – If Hu Jintao was out to win hearts and minds here Wednesday, he succeeded.

Dan Bates / The Herald

Chinese President Hu Jintao hugs Paul Dernier of Everett after the 42-year-old 777 supervisor from Mukilteo presented him with a Boeing cap Wednesday at the company’s Everett plant.

Speaking in a room full of 600 corporate leaders and elected officials, the Chinese president touched on all of the contentious trade issues between China and the United States – trade imbalance, currency valuation, intellectual property rights and market access.

“Given the rapid growth, sheer size and wide scope of our business ties, it is hardly avoidable that some problems have occurred,” Hu said during his speech at the Future of Flight museum.

“However, mutually beneficial cooperation and common development remain the defining feature of our business relations.”

The speech was “very bullish from our perspective,” said Fred Kiga, director of government and corporate relations with Russell Investment Group, the Tacoma-based financial services giant. “That was a very important speech.”

“He may be from a communist country,” added state Sen. Paull Shin, D-Edmonds, “but he speaks like a typical capitalist.”

Quoting a Chinese poet from 1,200 years ago, Hu said, “I will brave the winds and waves to cross the vast ocean.”

His stop in the Puget Sound region was perceived by many as a safe harbor on that journey, a chance to receive a friendly reception from an American audience before facing a more contentious crowd in Washington, D.C., where Hu meets with President Bush today.

Hu’s proposals – lowering trade barriers, cracking down on software piracy and lessening the trade imbalance – were well received by his Puget Sound-area audience, which included corporate chiefs from the Boeing Co., Microsoft and Starbucks, along with two governors, some congressmen and former Secretary of State Henry Kissinger.

State officials pointedly drew a distinction between the two Washingtons on Wednesday.

“We’ve talked about the ‘real’ Washington and the ‘other’ Washington,” Gregoire said. The real Washington, she said, is “the home of Boeing, the home of Microsoft and the home of many other trade opportunities.”

Washington is the only state that actually runs a trade surplus with China, Gregoire said – largely because of Boeing. The state’s businesses sold $5 billion worth of goods in China last year.

According to a previously prepared English translation of his speech, Hu spoke of a special relationship between China and this region, saying the “American Northwest is closer to China than any other region of the American continent. It was also the first region in the United States to start trading with China.”

There are more opportunities for American businesses in China, Hu said. China “welcomes American business investment in China’s high-tech industry, modern agriculture, service industries, environmental protection industries and infrastructure development.”

That would be to everyone’s benefit, said Microsoft Chairman Bill Gates, who spoke at Wednesday’s luncheon after hosting Hu at a private dinner Tuesday night.

“Both the United States and China will prosper in an environment of open trade,” he said.

Hu invited U.S. companies large and small to set up regional operations in China.

But at the same time, “China encourages Chinese companies to seek business opportunities in the United States,” Hu said. “Our two governments should facilitate and support cooperation between the business communities of the two countries.”

Chinese ownership of U.S. companies has been a contentious issue in Congress. But, Hu said, “trade issues should not be politicized.”

The U.S. trade deficit with China has topped $200 billion for the past two years. China takes the imbalance seriously, Hu said. “China does not seek a large trade surplus,” he added.

Much of the reason for the imbalance is structural, Hu said, noting that the United States primarily imports goods from China that it no longer produces. “Even if not from China, the United States would still have to import these products from other suppliers.”

China also is committed to cracking down on software piracy, Hu said. It has ordered all government computers to run licensed software and is promoting the use of licensed software among large Chinese enterprises.

Gates said he was encouraged by Hu’s commitment.

And Kiga said Russell considered that “a major olive branch.”

Hu defended China’s position on currency valuation. Some in Congress have criticized China for keeping the value of its currency, the yuan, artificially low, saying that exacerbates the balance-of-trade problem by making Chinese goods cheaper and American products more expensive.

But Hu said a new policy adopted last year allows the yuan to float against a market basket of eight major currencies. The goal is for a stable Chinese currency that serves both U.S. and Chinese interests.

After his speech, Hu departed Paine Field in a China Airlines 747 for his meeting with Bush. He will encounter members of an administration and Congress seeking to press him on noneconomic issues such as human rights and geopolitics – subjects the Chinese president did not raise while in Washington state.

Everett business consultant Barbara Earl said Hu’s message was: “We need each other, we need each other bad.”

And Boeing Commercial Airplanes chief Alan Mulally said he was impressed by Hu’s use of the phrase “mutually beneficial,” which came up six times in his speech.

“I’ve never heard that so many times,” he said. “They really want to work together.”

Eleven-year-old Jake Hecla of Everett agreed. “I thought the speech was wonderful,” he said. “The point of it was probably that the United States needs China and China needs the United States in order for our economies to survive.”

Shin, who speaks Mandarin Chinese, said Hu’s speech impressed him for its meticulous detail and rich vocabulary.

“He feels it inside,” the legislator said. “He sees business first. He wants closer dialogue with us.”

Starbucks Chairman Howard Schulz said he came away impressed by Hu.

“He is a very special person,” Schulz said. “From minute one, he came to earn respect, and I think he did.”

Herald writer Jerry Cornfield contributed to this story.

Reporter Bryan Corliss: 425-339-3454 or corliss@ heraldnet.com.

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