Hu Will Press Bush on Energy Deals

By REBECCA BLUMENSTEIN Staff Reporter of THE WALL STREET JOURNALAugust 25, 2005 8:55 p.m.; Page A11

BEIJING -- Chinese President Hu Jintao plans to urge President Bush at a coming meeting to let companies from both their nations pursue energy acquisitions without politics getting in the way, a senior Chinese official said.

The official, talking about the scheduled Sept. 7 meeting in the U.S. between the two presidents, said energy "is very likely to be one of the items on the agenda."

While each country should be able to pursue its own strategy, "we hope that business issues will prevail and the issues will not become politicized," the official said.

The meeting between Messrs. Hu and Bush will take place five weeks after China's Cnooc Ltd. halted its efforts to buy U.S. oil company Unocal Corp. for $18.5 billon. American lawmakers raised an outcry about a Chinese company potentially buying U.S. energy assets. While Cnooc's offer for Unocal topped that of Chevron Corp. of the U.S., the Chinese company withdrew it because of the stiff U.S. resistance, leaving the way open for the American bidder to win.

Chinese officials have high hopes for Mr. Hu's trip, his first state visit to the U.S. since taking office in March 2003. They say relations between the two countries remain good, though they acknowledge that tensions have been rising during the past year over issues including America's widening trade deficit with China, Beijing's rising demand for natural resources such as oil, and concern about increased Chinese military spending.

Mr. Hu is expected to meet members of Congress and see factories in a trip that the Chinese government hopes will allow him to meet "regular people" as well as politicians. The Chinese leader is expected to give a speech at Yale University.

Among the messages Chinese officials hope Mr. Hu will convey is how open China has been to U.S. investment. The senior Chinese official, in his remarks yesterday about the trip, said more than 50,000 American enterprises have invested in China, "and we welcome their business." He estimated American investment in China at about $50 billion.

During the trip, Mr. Hu also is expected to highlight moves by China to increase its imports from the U.S., ranging from Boeing Corp. planes to soybeans.

Chinese officials say bilateral relations have been improving during the past two months. China recently moved to allow the yuan, formerly pegged at 8.28 to the dollar, to rise about 2% and introduced a reference to a basket of currencies. U.S. critics had been pressuring China to make an adjustment to its currency, which they argue makes Chinese exports to the U.S. unfairly inexpensive. Many argued that China's move didn't go far enough.

Mr. Hu doesn't intend to discuss China's currency during the meeting with Mr. Bush, according to the senior official, who called it an internal matter. However, he said Beijing will continue on "this road to reform" of its currency, though he declined to be specific about any possible further adjustments.