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China envoy to improve US-China economic ties

WASHINGTON -- The nomination of veteran Sen. Max Baucus as U.S. ambassador to China reflects the importance to Washington of advancing the economic relationship with the Asian power despite recent strains on security issues.

The Montana Democrat lacks foreign policy credentials but has a track record in pressing Beijing over trade barriers and its currency exchange rate. If his appointment is confirmed by the Senate, he will be looking to see that U.S. companies can benefit from market reforms the ruling communist party promised in November.

While the economic relationship between the countries is loaded with its own problems, including accusations of rampant Chinese cybertheft of U.S. trade secrets, it is one where their national interests are more aligned than on security, as China challenges decades of U.S. military pre-eminence in the Asia-Pacific.

China's declaration of an air defense zone over disputed territory in the East China Sea and a near-collision of U.S. and Chinese naval vessels this month brought those concerns to the fore. Defense Secretary Chuck Hagel on Thursday described China's conduct in the Dec. 5 incident in the South China Sea as “irresponsible.”

But when U.S. President Barack Obama announced Friday his intent to nominate Baucus as ambassador, he was stressing the senator's work over two decades on economic agreements with China that he said have created millions of American jobs. “He's perfectly suited to build on that progress in his new role,” Obama said in a statement and called for a swift confirmation.

Baucus pushed for China's inclusion in the World Trade Organization in 2001, a key step in its integration in the world economy. Since then China has emerged as world's second-largest economy after the U.S., and America's second-largest trading partner. Two-way trade is projected to reach US$558 billion in 2013.

But China's record on its WTO obligations is mixed, and trade with the U.S. is skewed heavily in China's favor. As chair of the powerful Senate Finance Committee, which oversees trade, Baucus has in recent years sponsored legislation to punish China for undervaluing its currency to benefit its exporters. The measure never made it into law. He's also criticized China for shutting out U.S. beef imports. But he's remained a strong advocate of expanding trade.

“The economic and financial relationship with China is crucial,” said Cheng Li, a China expert at the Brookings Institution, a Washington think tank. “If that part of the relationship is healthy it can spill over and have a positive effect in other areas. But if it's jeopardized it can adversely affect other areas, including on security.”

He expected China's leaders to welcome Baucus' appointment, given his stature as a six-term senator and close ties with Obama.

China's Global Times newspaper, which is affiliated with the ruling party, said Baucus' experience made him a good pick for the job.

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