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Americans Favor Patience With China on Trade Gap, Yuan Change

April 13 (Bloomberg) -- Americans want to maintain good economic relations with China and are less concerned about the near-record U.S. trade deficit, according to a Bloomberg/Los Angeles Times poll.

By a margin of 50 percent to 26 percent, Americans say China should be allowed to proceed at its own pace in making its currency more flexible rather than being forced to make changes to reduce its trade gap with the U.S.

That view contrasts with the atmosphere and rhetoric in the U.S. Congress, where at least 15 legislative measures have been introduced in the past year addressing trade and currency issues with China. Senators Charles Schumer and Lindsey Graham are among politicians who say China is keeping the yuan artificially weak to increase exports.

``China is on its way to being an economic giant,'' said Rick Haverman, a 46-year-old high school history teacher in Spokane, Washington, who participated in the poll. ``That trumps the trade deficit, which I see as more of a short-term problem.''

Americans are also supportive of foreign investment in the U.S., with nearly 7 in 10 saying overseas companies should be allowed to put money into some areas of the U.S. economy, according to the survey of 1,357 adults conducted from April 8 to April 11. The margin of sampling error is plus or minus 3 percentage points.

The news isn't all good for overseas companies looking to do business in the U.S. Fifty-one percent said some restrictions on investment are more important than the jobs such investments create.

`Global Engagement'

The conclusions suggest Congress may be less likely to impose penalties on China, given the lack of public support. Exports, including to the U.S., helped China's economy vault ahead of the U.K. in the fourth quarter to become the world's fourth largest.

The U.S. trade deficit swelled to a record $726 billion last year, including a shortfall of $202 billion with China. The overall gap narrowed in February from the previous month, the Commerce Department said yesterday.

``There is broad public support for global engagement, not global withdrawal,'' said Tom Mann, a congressional scholar at the Brookings Institution in Washington.

Haverman's attitude, typical of many respondents contacted after the poll, probably reflects current economic prosperity, says Nicholas Lardy, a senior fellow at the Institute for International Economics in Washington. The U.S. jobless rate matched a four-year low of 4.7 percent in March and the Conference Board's measure of consumer confidence climbed to the highest since 2002.

``We're at almost record-low unemployment, so the trade deficit isn't perceived to be weighing on jobs like it was a few years ago,'' said Lardy, author of six books on Chinese economics and government policy.

Summit Agenda

The value of the yuan will likely be discussed by President George W. Bush and Chinese President Hu Jintao when Hu arrives in Washington next week. Bush has chosen to tread lightly on the topic, while Congress has been pressing him to force the issue.

A Senate bill sponsored by Schumer, a Democrat from New York, and Graham, a South Carolina Republican, would impose 27.5 percent tariffs on Chinese imports unless the yuan rises. They delayed a vote on their bill until September.

As for American attitudes on U.S.-China relations, ``the two things aren't contradictory,'' Schumer wrote in an e-mail yesterday in response to questions. ``A good relationship with China in part depends on their willingness to stop manipulating their currency.''

Fretting About Security

Another trade issue, foreign investment in the U.S., flared in Congress during February when Dubai-based DP World attempted to buy several U.S. port facilities. Opposition from Republicans and Democrats, citing national-security concerns and a lack of consultation, forced the firm to abandon the purchase.

One bill, introduced by House Armed Services Chairman Duncan Hunter of California, would require any company that owns or operates an asset deemed ``critical infrastructure'' by the defense secretary to be majority-owned by U.S. citizens.

Only 16 percent of Americans say foreigners should be barred from investing in the U.S. At the same time, just one in 10 said foreigners should have carte blanche to buy whatever they want. Most said foreigners, including those in Arab countries, should be allowed to invest in ``some areas'' of the U.S. economy.

``I wouldn't want to eliminate foreign companies from investing in anything in the U.S.,'' said Mckenzie Laurence, 26, a real estate broker in Jacksonville, North Carolina. ``But there are certain lines in the sand I'd be more comfortable that they didn't cross.''

Some Limits

Laurence, who took part in the poll, said barring foreigners from defense-related industries would be prudent, as well as keeping them from dominating any single market.

``The U.S. needs to compete for foreign investment, because there are many other places to invest now,'' said George Nolen, chief executive officer of Siemens Corp., a unit of Siemens AG, Germany's largest engineering company. Siemens employees 70,000 people in the U.S.

Randall Eferson, 51, an oil company supervisor in Baton Rouge, Louisiana, said foreigners should be allowed to invest in whatever they want to, ``as long as it goes through the proper review procedures.''

Jobs may also be the issue there, said Lardy. ``There's a fairly widespread understanding that foreign investment in the U.S. helps create jobs,'' he said.

Arab Caveat

Americans are slightly less amenable when the foreigners are Arabs. Twice as many said Arabs should be barred from investing in the U.S. as those who said foreigners in general ought to be excluded.

For most Americans, ``English speakers from Australia are one type of investor, and those from the Middle East are another type of investor,'' said Edwin Feo, co-chair of the Global Project Finance Department at law firm Milbank, Tweed, Hadley & McCloy LLP in Los Angeles, which represents foreign companies looking to invest in U.S. infrastructure.

Despite a general openness of Americans to foreign investment, Feo says he's seeing growing opposition after the failed DP World deal.

Macquarie Bid

This week, Cintra-Macquarie, a Spanish-Australian consortium, is scheduled to sign a 75-year lease on a toll road in Indiana. The deal may be delayed by a lawsuit filed by a group of Indiana citizens.

``Americans feel that everything is slipping out of our hands, and we're losing control of our whole way of life here,'' said Steve Bonney, a West Lafayette, Indiana, farmer who represents the group. ``Globalization is working against us.''

``Indiana and the discussion that went on there highlighted some of the concerns states and municipalities have about the extent of foreign investment,'' Feo said.

It's that climate that in March scuttled the $225 million acquisition of Columbia, Maryland-based Sourcefire Inc. by Check Point Software Technologies Ltd., an Israeli maker of computer- security software.

``Everybody was disappointed it didn't happen,'' said Michelle Perry, chief marketing officer at Sourcefire, which makes network security software and appliances.

``We decided that the current political climate for international acquisitions was not favorable for us to continue down that path,'' Perry said.

That may be the way the public wants it.

``Anything that has to do with security should be off limits to foreigners,'' says Tina Barteau, 43, of St. Charles, Missouri. ``Security issues are more important than jobs,'' added Barteau, who is currently unemployed and looking for work.

To contact the reporter on this story: Matthew Benjamin in Washington at Mbenjamin2@bloomberg.net .