In China, Pawlenty and Schwarzenegger bring different trade messages

By ELAINE KURTENBACH, AP Business Writer

SHANGHAI (AP) - Two American governors, two completely different messages.

As pressure to create jobs heats up ahead of November's U.S. elections, the volume of rhetoric on trade issues is also rising.

Minnesota's Republican governor Tim Pawlenty, who is viewed back home as a future presidential hopeful keen to burnish his foreign policy credentials, took a critical approach Monday in Shanghai, where he was leading a trade mission to Asia, likely his last before leaving office.

His California counterpart, Arnold Schwarzenegger, opted to play nice.

News last week that China's trade surplus hit its second-highest level this year in August, at $20 billion, will likely fan demands by Washington and others for faster changes in China's currency policies. Some American lawmakers are pushing for sanctions over the issue.

"The currency trajectory in trade with China is unsatisfactory. We need to make some progress, short of a trade war."

"The currency trajectory in trade with China is unsatisfactory. We need to make some progress, short of a trade war," Pawlenty told a group of American business executives.

He said China was moving too slowly with its incremental loosening of controls on its currency, a perennial complaint among those who believe the yuan is undervalued, providing Chinese exporters with an artificial advantage over American manufacturers.

"'Friendly competition' needs to be fair," Pawlenty said. "We're not going to be friends if one of us feels it's not fair," he said.

Minnesota, with a population of about 5.3 million, logged $1.3 billion in manufactured exports to China in 2009 and $700 million in farm exports. Major state-based companies with big business interests in China include Best Buy Inc., 3M and Medronic Inc.

California reported exports worth $10 billion to China in 2009.

Fellow Republican Schwarzenegger, heading an even larger trade delegation to China, Japan and South Korea, focused instead on the importance of more trade, and on praising Chinese leaders for their "extraordinary vision."

Visiting a steel factory where workers are building sections of the Bay Bridge's new eastern span, Schwarzenegger said his state's planners should emulate the Chinese leadership in thinking ahead for the future.

"They think big and that is exactly what I've always wanted to do for California."

The goal of the $6.3 billion Bay Bridge project, scheduled to open in 2013, is to replace the bridge, damaged in the 1989 Loma Prieta earthquake, before the next big cataclysm.

Schwarzenegger visited a high-speed rail station in Shanghai as part of a fact-finding effort for his state's own planning, and afterward said the state-of-the-art facilities were built for the next century - something California also needs to do.

"You have to think ahead, way ahead. The Chinese have that ability," he said.

The Chinese, their economy still growing at a rate of about 10 percent, have invested lavishly upgrading railways, ports and other infrastructure as they fought off the impact of the financial crisis.

Both Pawlenty and Schwarzenegger, facing daunting budget shortfalls back home that make such investments more challenging, urged faster action on improving American competitiveness.

"I want to see cranes everywhere," Schwarzenegger said, but he acknowledged that the U.S. politics, with its checks and balances, unlike China's communist-ruled system, makes such sweeping moves more difficult.

"We have a wonderful political system in America but it does have its disadvantages, no two ways about that," he said. "It's like going through a slalom gate, looking down a ski slope and seeing a hundred slalom poles out there and you have to navigate through them.

"That's what it is like when you do something in the United States," Schwarzenegger said.

(Copyright 2010 by The Associated Press. All Rights Reserved.)