Currency impasse overshadows U.S.-China deals

Reuters

The United States and China struck civil aviation and financial sector access deals on Wednesday but they made no headway on the divisive issue of Chinese currency reform, stoking anger on Capitol Hill.

Lawmakers said they would move ahead with proposals to slap tariffs on Chinese imports because of Beijing's reluctance to redress the huge trade imbalance between the economic giants with a revaluation of the yuan.

The anger in Congress overshadowed U.S. Treasury Secretary Henry Paulson's claim of "tangible results" in the second leg of a "strategic economic dialogue" with Chinese Vice Premier Wu Yi.

Wu, for her part, said the "complicated" relations between Washington and Beijing needed careful handling and cautioned against retaliatory steps.

"It calls for direct consultation and dialogue between us, instead of easy resort to threat or sanctions," Wu said after two days of closed-door talks with Bush administration officials.

The official China Daily newspaper said in an editorial that both countries bore responsibility for the trade gap between them and warned against U.S. impatience for a rapid cure.

"The dialogue made it clear that a confrontational approach focusing on so-called immediate results only complicates the situation and adds nothing to problem solving," it said.

China's stellar economic growth was indeed too dependent on exports, the daily said, but it was also "all too obvious that the U.S. consumers spend too much and save too little, resulting in their country's current account deficit."

Tension was heightened during the talks by mounting concern about the safety of Chinese exports after reports about toxic toothpaste and contaminated pet food.

U.S. officials said they stressed to their Chinese counterparts that food and medicine safety was a "top concern."

"Recent events have forced very clearly as one of our top concerns the safety of food and medicine," Health and Human Services Secretary Mike Leavitt said.

CHINA "DOING ITS BEST"

The most concrete outcome of the talks was a deal committing China to remove a bar on new foreign securities firms and resume issuing licenses for securities companies, including joint ventures, in the second half of 2007.

That was a coup for former Goldman Sachs chairman Paulson, who has made gaining greater access to the Chinese financial sector a key objective.

The two sides also agreed on a new aviation pact that U.S. transportation officials said would more than double the number of passenger flights between the two countries by 2012.

Meanwhile, Chinese Vice Commerce Minister Ma Xiuhong said a Chinese business delegation on a 24-state U.S. tour had signed $32.6 billion in deals so far.

The buying spree appeared timed to soften U.S. congressional criticism of China's practice of managing its currency, the yuan, in a way that U.S. lawmakers and companies complain makes Chinese products unfairly cheap in U.S. markets.

But the chairman of the powerful House of Representatives Ways and Means Committee, New York Democrat Charles Rangel, said after a meeting between Wu and committee members that "we're moving forward" on tariff legislation.

Rangel favors a bill to let the Commerce Department levy duties on Chinese goods to offset the "subsidy" effect of China's exchange-rate policies.

Rangel's swift decision suggested that time was running out for Paulson to show that persuasion is sufficient to get China to permit the yuan to appreciate more quickly.

In July 2005, China abandoned an 11-year-old practice of holding the yuan fixed against the dollar and revalued it by 2.1 percent. But since then it has risen only a further 6 percent, frustrating U.S. legislators.

The head of China's central bank, Zhou Xiaochuan, said China had pressures of its own to deal with that made it hard to speed up currency reform.

"They may think that we can accelerate the speed of reform, but we think that we already try our best, and domestically we have pressure to slow down," Zhou told reporters after meeting the lawmakers.

China remains an emerging-market economy only partly driven by free-market forces, but its cheap labor force and exporting prowess have enabled it to become the world's fourth-largest economy, behind the United States, Japan and Germany.

Army says Dragon Skin armor falls short

By LOLITA C. BALDOR, Associated Press Writer

The U.S. Army, in a rare move Monday, released a barrage of test results showing that a privately-sold flexible body armor that some families have sought for their soldiers failed extensive military testing.

Pieces of the hefty Dragon Skin armor, with ragged holes torn through its yellow inner skin, were propped up on the floor in the Pentagon, as Army officials systematically detailed the battery of ammunition and temperature testing the armor failed.

Although the tests were done nearly a year ago, the Army declined to release details until Monday, after recent NBC News reports suggested that the Dragon Skin may be better than the Army-issued Interceptor armor.

As a result of the reports, some members of Congress have asked for an investigation into the matter, and others have asked the Army for more information.

"We take this personally," said Brig. Gen. Mark Brown, executive officer for the Army's armor testing program. "One third of the general officers in the United States Army have either a son or daughter either in theater (at war) today or (who) has been to theater."

Holding up an armor-piercing bullet, Brown showed video of the tests, including footage of officials peering into the bullet hole in the Dragon Skin armor. "At the end of the day, this one disc has to stop this round. It didn't. Thirteen times," he said.

In response, Murray Neal, president of Pinnacle Armor which produces Dragon Skin, suggested that the Army lied about some of the testing, and he questioned why the Army was counting shots that "were fired into the non-rifle defeating areas."

The body armor debate has raged almost since the Afghanistan and Iraq wars began, as the Army struggled at times to get all of the needed equipment to its soldiers — both active and reserve. At times, family members around the country were raising money, having bake sales, and spending thousands of dollars of their own cash to buy armor and equipment for their loved ones going to war.

In some of those cases, families were considering buying Dragon Skin armor because they believed it would provide better protection. The Army Monday said it was releasing the test details to help prevent families from spending money on body armor that is not as good as the protection already issued to the soldiers.

Brown described "catastrophic failures" by the Dragon Skin armor, and said that in 13 of 48 shots, lethal armor-piercing rounds either shattered the discs that make up the armor, or completely penetrated the vest.

"Zero failures is the correct answer," he said. "One failure is sudden death and you lose the game."

Brown added that the armor failed to endure required temperatures shifts — from minus 20 degrees to 120 above zero — which weakened the adhesive holding the discs together. And he said that the Dragon Skin's heavy weight was also a problem for soldiers who need to carry a lot of gear.

The Dragon Skin, he said, weighs 47.5 pounds, compared to the Army-issued Interceptor armor, which weighs 28 pounds.

After seeing the latest television reports, Sen. Edward M. Kennedy, D-Mass., sent a letter to Army Chief of Staff Gen. George Casey asking for more information and saying he's concerned that the Army may not be providing better body armor to the soldiers as quickly as possible.

And Sen. Hillary Clinton, D-N.Y., sent a letter to the Government Accountability Office, a government watchdog agency, seeking an investigation to assess the body armor being used by the military.

Army officials said they would be going to Capitol Hill this week to talk to lawmakers about the armor issue.

Immigration protesters demand path to citizenship

By PETER PRENGAMAN, Associated Press Writer

Angry over recent raids and frustrated with Congress, thousands of people protested across the country Tuesday to demand a path to citizenship for an estimated 12 million illegal immigrants.

From Phoenix to Detroit to Miami, thousands of people carried American flags in the streets.

Organizers say immigrants feel a sense of urgency to keep immigration reform from getting pushed to the back burner by the 2008 presidential elections.

"If we don't act, then both the Democratic and Republican parties can go back to their comfort zones and do nothing," said Angelica Salas, director of the Coalition for Humane Immigrant Rights of Los Angeles. "They won't have the courage to resolve a major situation for millions of people."

In Chicago, thousands of demonstrators carried American flags, signs and placards, including one that read, "We may not have it all together, but together we can have it all."

Melissa Woo, a 22-year-old American citizen who immigrated from South Korea, carried a Korean flag over her shoulder as she criticized politicians for "buckling at the knees."

"Us immigrants aren't pieces of trash, we're human beings," she said. "To be treated as less than human is a travesty."

Thomas Rodriguez, of Aurora, stood in Union Park wearing a shirt that said: "We are hard workers. We're not criminals."

The 38-year-old has had no legal status since he came to the United States from Mexico in 1989 and is an employee at a Japanese restaurant in Chicago.

"Recent raids have worried me," he said. "We worry deportations are leaving too many young people without parents."

In southwest Detroit, hundreds of people wore red and white and carried American flags to a rally.

"Most of the undocumented people come here as a necessity of survival," said Rosendo Delgado, of Latinos United, one of the groups organizing the march. "For them, it's the only choice."

A mariachi band played in Phoenix as marchers walked from the fairgrounds toward the state Capitol.

"We want just reform," said Mayela Ruiz, another illegal immigrant. "I've been here 15 years. I've worked hard, paid my taxes. I've had no problems with the law and I'm afraid to leave my house. I want a law that would allow me to work and live in freedom but not like a slave."

A few dozen counter-protesters across the street from the Capitol got in a shouting match with some at the rally.

"I want to send them back," said Phoenix resident George Propheter, who held up a large handwritten sign that read "Hell No." "I've been in the city for 40 years. They've completely destroyed our city."

No rallies were planned in Atlanta, where 50,000 marched last year, because many immigrants were afraid of the raids and of a new state law set to take effect in July. The law requires verification that adults seeking non-emergency state-administered benefits are in the country legally, sanctions employers who knowingly hire illegal immigrants, and requires police to check the immigration status of people they arrest.

"There's a lot of anxiety and fear in the immigrant community," said Jerry Gonzalez of the Georgia Association of Latino Elected Officials.

In Oakland, Calif., about 2,000 people marched to City Hall.

"Nothing has happened since last year," said Gloria Ramos, 51, a social worker at a children's nonprofit who left her native Mexico for Oakland 32 years ago. "Things are getting worse for our people — more discrimination, less benefits."

In Los Angeles County, home to about 1 million illegal immigrants, by far the largest concentration in America, marches were set to include demands for a legalization program, a stop to the raids and an anti-Iraq war message. City and transportation officials were planning for as many as 500,000 people in downtown Los Angeles, believing it could be the largest in the city so far this year.

Los Angeles public school teacher David Cid said he came to support his students, many of whom are suffering because of recent raids that have impacted their families.

"They feel terrorized," he said.

Despite divisions over tactics and other issues, immigration groups and supporters said the diverse events will show the movement is stronger than ever.

"Just because the 12 million people who don't have legal residency don't attend a march doesn't mean they don't want it," said Eduardo "Piolin" Sotelo, a popular Spanish-language disc jockey. "I tell my listeners that no matter what they do, just don't stop doing something."

After last year's protests, reform legislation stalled in Congress and bipartisan proposals for illegal immigrants to gain citizenship have gotten more conservative.

This year, about 400 members of Asian groups from across the country are set to make a lobbying push with lawmakers in Washington.

Organizers said Tuesday's turnout will be lower than the 1 million who took to the streets last year. Stepped-up raids in recent months have left many immigrants afraid to speak out in public — a major change over rallies in 2006 when some illegal immigrants wore T-shirts saying "I'm illegal. So what?"

"These raids have torn apart families," said John Crockford, a member of the Central California Coalition for Immigrant Rights.

In Fresno, organizers planned a rally focusing on children whose parents had been deported. The San Joaquin Valley is home to thousands of seasonal workers who work illegally each year in the fields and construction industry.