Rice concerned over China's economic challenge

Fri Aug 19,10:37 AM ET

WASHINGTON (AFP) - US Secretary of State
Condoleezza Condoleezza Rice said in an interview published that China must modify its economic policies to shed its status as a "problem for the international economy."

Though faulting China on its military buildup and human rights and religious freedom, Rice however told the New York Times that Beijing and Washington still enjoyed a "good relationship."

The interview was published three weeks after China National Offshore Oil Corp (CNOOC) abandoned an 18.5-billion-dollar takeover bid for California firm Unocal Corp. which had sparked fierce criticism of Beijing among US lawmakers.

There have also been calls for China to revalue its currency, which the United States says currently make Chinese exports more attractive to US consumers and US goods more expensive in China.

China last month freed the yuan from an 11-year-old peg to the US dollar and allowed the unit to appreciate 2.1 percent.

Rice said she had told Chinese leaders in recent meetings that they should take note of unrest in Congress about Sino-US relations.

"Don't ignore what people are saying to you about the problems of a Chinese economy that is both big and unreformed," Rice said she told China's leaders.

"We remind them that the president is a free trader, but he is a free trader who believes there has to be a level playing field for American workers and farmers and American goods."

Rice also cautioned that she was concerned about China's military buildup which she termed "outsized for its regional interests" and registered concern about human rights and religious freedom.

"But on balance," Rice was quoted as saying, "it is a good relationship" with "a considerable benefit in the war on terrorism" and over the North Korea nuclear crisis.