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China Trade Impasse Frustrates U.S. Lawmakers

China's Vice Premier Wu Yi in a speech Thursday night rebuffed U.S. demands for trade and currency reforms. President Bush commented that he was "disappointed." What does this mean for trade relations between the two key economic powers? Morris Reid, former Commerce Department aide under President Bill Clinton, and Kellyanne Conway, president and CEO of The Polling Company, gave their opposing views on "Morning Call."

As CNBC's Dylan Ratigan noted, Wu asserted that the U.S.' $233 billion trade deficit is not related to the value of the yuan -- and China, therefore, is not obligated to make a currency adjustment.

Reid, now a managing director at Westin Rinehart and a CNBC contributor, said that Wu "might be right or wrong" -- but he believes that the question is moot, as "the Chinese have the upper hand." He declared that the Bush administration "has a problem: Because they've lost credibility in the world, they do not have any leverage."

But he cautioned lawmakers on the other side of the aisle to tread carefully with proposed protectionist legislation. "If [Democratic Senator] Schumer takes too hard a line," Reid warned, it could create a backlash against Democratic pretenders to the White House.

Conway disagreed. She noted that this week's trade talks were merely the second part of "two-pronged" discussions that began last year, and thus cannot be considered conclusive yet. As to "solutions," she maintained that the unceasing march of "rapid globalization" will naturally force China to adapt to the world's standards over time.