Chinese President Hu Jintao has chosen the Microsoft headquarters in Seattle as the first stop of his US visit. Analysts in China say the olive branch from the Chinese leadership may help break the US barrier against high-tech exports to China.

"President Hu wants to make it clear by this move that high-tech enterprises are the main force behind promoting Sino-US trade. They are also the main beneficiaries of this trade," said Zhang Yansheng, a researcher with the Academy of Macroeconomic Research under the National Development and Reform Commission.

Since high technology is the main source of strength for the US economy, it is generally agreed that restrictions on high-tech exports to China will damage the competitive power of the US and put it in an unfavorable situation.

Official figures show that China signed technology transfer contracts worth 720 million yuan (US$90 million) with the US in the first quarter, compared to 2.73 billion yuan with Japan and 2.52 billion yuan with Europe.

Chinese Commerce Minister Bo Xilai said the trend of US high-tech exports to China lagging far behind the European Union and Japan is already having an adverse impact on the Sino-US trade balance.

Director of the China National Institute of WTO Zhang Hanlin said: "Restrictions on high-tech exports should be a dynamic system, because today's advanced technologies might not be so advanced tomorrow. China's technical progress has been very fast over the past 10 years, so the US must know that not all its advanced products will be competitive in China.

Ma Jun, chief economist for the Great China region with the German Bank, said China is turning an investment-driven import market to a consumption-driven market. He predicted that aircraft, digital camera, high-end medical equipment, nuclear power and 10 other categories shall benefit from strong demand in China in 2006 and 2007.

Japan, the Republic of Korea and many other countries are already in the process of expanding their high-tech exports to China, which is expected to import as much as 1 trillion US dollars worth of products annually by 2010.

"China is already an important part of the global economy. Expanding exports to China will not only bring profits to US exporters, but also create more jobs," said Zhang Yansheng.

Chinese figures show that its trade with the US has been growing at an annual rate of 27.4 percent between 2001 and 2005. China is now the third largest trade partner of the US, while the US has become the second biggest trade partner of China.

In 2005, US exports to China stood at 48.7 billion dollars, a rise of 158 percent from 2000. China had a trade surplus of 100 billion dollars against the US in 2005.

China has been making efforts to reduce its trade surplus against the United States. Just before Hu's visit, a Chinese business delegation led by Vice-Premier Wu Yi visited the US and signed deals worth 16.2 billion dollars for the import of aircraft, software, mobile telecommunications equipment and other high-tech products.

China's leading computer producer Lenovo announced on Monday that it will buy 1.2 billion dollars worth of products from Microsoft in the next 12 months, in response to the Chinese government's call for all government bodies and big businesses to use authentic software.

It has also been reported that China is considering new policies that will encourage the import of high-tech products by providing low-interest loans to importers. Tariffs on key high-tech equipments will also be cut further.

"The adjustment of Sino-US trade requires bilateral actions. The US needs to take solid actions as China has already done," said Zhang Yansheng.

(Xinhua News Agency April 20, 2006)