Bush brings fight for economy to Asia

Six-day tour to include push for Japan, China to revalue currency

October 18, 2003|By Mark Matthews | Mark Matthews,SUN NATIONAL STAFF

WASHINGTON - For two years, terrorism and the threat of a nuclear-armed North Korea have dominated America's relationship with the Pacific Rim. But as President Bush opened a six-day, six-nation Far East trip yesterday, his efforts to spur a still-weak U.S. economic recovery shared equal billing with his national security priorities.

With polls suggesting that Bush's handling of the U.S. economy continues to pose the biggest danger to his re-election in 2004, the White House has made a point of highlighting administration efforts to boost American exports and improve what officials call "economic security for American workers."

Bush arrived in Tokyo yesterday on the first stop of a whirlwind visit that will take him to the Philippines, Thailand - where he will attend the annual Asia-Pacific Economic Cooperation summit - Singapore, Indonesia and Australia. Bush spent Thursday campaigning in California and will stop on his way home in Hawaii, where he will attend a Republican fund-raiser and also lay a wreath in honor of U.S. military personnel who perished in World War II.

Job creation a goal

Before leaving Washington, Bush promised to pressure Japanese and Chinese leaders to raise the value of their currencies. The aim is to make U.S. goods more affordable overseas and imports more expensive, so as to encourage Americans to buy more domestic goods and stanch job losses.

"My main focus here in America is ... significant job creation," Bush told Asian journalists in a pre-trip interview. Part of doing that, Bush said, is "to talk to our trading partners about fair trade."

"We'll talk about currency with the Chinese and with my friend, Prime Minister Koizumi," Bush said, referring to Junichiro Koizumi of Japan.

The push for a currency revaluation by the two giant Asian economies is part of the administration's search for alternate ways of boosting American exports after the collapse last month of world trade talks at the Mexico resort of Cancun.

U.S. trade officials are also pursuing regional and bilateral trade pacts, including one with Thailand, Bush's third stop, and are negotiating a free-trade agreement with Australia.

Pressure builds

Political pressure is mounting on Bush to demonstrate that he is fighting to preserve American manufacturing jobs. Senate Democratic Leader Tom Daschle of South Dakota urged the administration this week to investigate what he called China's currency manipulation.

"Bush is trying to show American workers that he's trying to enforce fair rules of the game," said Morris Goldstein of the Institute for International Economics in Washington.

But Bush's push to get China to "float" its currency, rather than peg it to the dollar, is "not helpful," Goldstein contends. Despite its extensive economic gains, China is not ready to take such a step, which poses the risk of an outflow of capital from China, he said. Bush would be better off urging China to peg the yuan to a basket of currencies, he argued.

As for Japan, Koizumi politely rebuffed Bush's currency demands during their meeting yesterday and in the process gave the American president a short economics lesson.

"The prime minister did not make any firm commitments," a senior Bush administration official told reporters afterward. But Koizumi "did caution that rapid fluctuations in exchange rates could be dangerous and upsetting to the markets," the official added.

Bush cannot afford to press the matter too hard. As U.S. relations with France and Germany remain badly strained, the administration is increasingly reliant on Asian allies to help pursue its key foreign policy goals: stabilizing Iraq, waging the war on terrorism and preventing North Korea from developing a nuclear arsenal.

One sign of how delicately the administration is treading came early yesterday when an administration official corrected National Security Adviser Condoleezza Rice's initial description of Bush's stop in Tokyo as a "layover."

"When you go to Japan, it's never a layover," a senior official told reporters on Air Force One. "This is one of our best friends, one of our best allies."

After Bush and Koizumi met, an administration briefer stressed Bush's appreciation for Japan's help on Iraq - not only in pledging $5 billion over four years to help in reconstruction, but also in lobbying members of the U.N. Security Council before Thursday's unanimous adoption of a U.S.-drafted resolution.

China, which wields a veto on the Security Council, is also given credit by administration officials, who say Beijing's announcement of support for the resolution helped sway Russia and Pakistan to favor it. Although Bush won't visit China on this trip, he will hold a meeting with its president, Hu Jintao, during the APEC summit.

During the summit, Bush is also hoping to persuade South Korea's prime minister, Roh Moo Hyun, to send troops to Iraq to help relieve the burden on American forces there.

North Korea crisis

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