China and US Spar Over Trade, Product Safety

U.S. and Chinese officials struck sparks at the opening of high-level talks on Tuesday as China's top trade official charged that "hyped" U.S. complaints about unsafe products unfairly smeared her country's reputation.

The opening of day-long bilateral talks, called the Joint Commission on Commerce and Trade or JCCT, was delayed more than an hour by what Chinese Vice Premier Wu Yi called a "very heated discussion in a small group" ahead of the formal meeting.

Trade boss Wu led a large Chinese delegation to meet U.S. counterparts headed by Commerce Secretary Carlos Gutierrez and Trade Representative Susan Schwab in talks focused on product safety and protection of intellectual property rights, areas where the U.S. says China is deficient.

Without referring directly to a spate of Chinese-made toys pulled from U.S. markets or complaints against China that Washington has taken to the World Trade Organisation (WTO), Wu said in opening comments that "disharmonious notes" had entered the two nations' dealings.

She made it clear that she believed the U.S. claims were overdone.

"U.S. media hyped about the quality of Chinese exports, causing serious demage to China's national image," Wu said through a translator.

She said there was "nothing strange" about trade partners needing to resolve issues and said there was no basis for concern that China was becoming less welcoming to foreign investment. "Opening up is basic state policy of China," Wu said. "China's door will be open forever."

Toymaker Mattel has recalled more than 21 million Chinese-made products in the past few months, adding to a growing tally of similar cases. A U.S. poll on Monday showed more than two-thirds of Americans say concern over product safety has hurt their confidence in Chinese goods.

Only a small part of the JCCT session was open to reporters, but Gutierrez used it suggest that China was too sensitive about the U.S. decision to take complaints about intellectual property protection to the WTO.

"When we take a case forward in a legal fashion, we do it as a matter of business, but never, never as a matter of disrespect or as a personal matter," Gutierrez said.

The two countries must beware of letting protectionist forces grow stronger and threaten both countries' economies, he said. "The way that we want to reduce our deficit is by exporting more, not by reducing imports," Gutierrez said.

As reporters were escorted from the room in a state guesthouse complex, Gutierrez said U.S. businesses were concerned about the potential rise of "economic nationalism" in China.

The U.S. Chamber of Commerce among others has expressed concern that China may be raising barriers to foreign participation in its economy in order to foster "national champions" in key sectors.

The JCCT precedes a two-day session of the U.S.-China "straegic economic dialogue", which focuses on longer term issues.

U.S. Treasury Secretary Henry Paulson, who will lead his side at the dialogue, has said that product safety was likely to top the agenda.