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Later this year, Hong Kong will revert to Chinese sovereignty. Hong Kong has
long been a magnet for investment and economic opportunity. I have been to
Hong Kong, and have seen its magnificent economic progress and vibrancy first
hand. I applaud your government's assurances that Hong Kong's autonomy will
be respected and that its economy will be allowed to flourish so that the peoples
of both Hong Kong and the rest of China can benefit from its dynamism and
accomplishments.

China's economic growth also means that your country may be seen
increasingly as an economic competitor to the United States in the global
marketplace, even as we cooperate on a growing number of issues. In fact,
our relationship is already feeling the impact of China's ascendancy on the world
market. The U.S. trade deficit with China is roughly $40 billion. Many
Americans, and many in Congress, believe rightly or wrongly that this is the
result of unfair trading practices by China, including the circumvention of textile
quotas through third country transshipments and a range of trade barriers that
restrict American access to the Chinese market. The continuing dispute over
intellectual property rights -- which cost U.S. businesses approximately $2 billion
annually -- is also an impediment to better relations between our two countries.
But we are making progress.

During my visit to Beijing in January, I met with Minister Sun Zhen-yu of your
Ministry of Foreign Trade and Economic Cooperation. We discussed the
prospect of U.S.-Chinese cooperation on a variety of economic issues. Our
discussions were frank and helpful. I was impressed by the fact that over the
past two decades China's total foreign trade has grown by more than an order of
magnitude. China's trade with the United States during this same period of time
has increased from $2.4 billion to $40 billion. This is a remarkable
accomplishment. However, it has led to a number of the problems I have cited.

These economic disputes are an irritant in our relationship that affect the
way Americans view China.Last year, after a vigorous debate, the Congress
voted to grant Most Favored Nation trading status to China. I voted in favor of
this. Many of my Republican colleagues in the House of Representatives did not.
This is somewhat troubling to me, since it was a Republican President, Richard
Nixon, who opened the door to China and a Republican President, George Bush,
who served as Ambassador to China. Nevertheless, unless these economic
disputes are resolved, it will be increasingly difficult for the Congress to support
such measures in the future. We must work to better understand and resolve
these issues so that our trading relationship will continue to grow vigorously.

I believe solutions to these issues can be found if both sides are willing to
work toward them in good faith and address the legitimate concerns of the
other. A continued dialogue between us is indispensable to achieving that
goal. Frankness and candor must also be indispensable elements of that
dialogue.