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By Doug Palmer

SHANGHAI (Reuters) - U.S. Agriculture Secretary Dan Glickman said on Thursday the United States must remain commercially "engaged" with China to influence progress in areas such as labor and human rights.

"The fact of the matter is, there are a lot of misconceptions at home about China, Chinese people, Chinese consumers," said Glickman, who is on a tour of Chinese businesses that use American products.

"Some of the concerns at home are valid, but other concerns are not based on the realities of what's happening here," Glickman said during a visit to a huge RT-Mart chain store.

Glickman has been leading a group of four U.S. congressman and North Dakota Gov. Ed Schafer on a presidential mission to learn more about China ahead of key trade vote in Congress at the end of May.

After two days in Beijing meeting with senior government officials and American business groups, the delegation has moved on to Shanghai where it toured the RT-Mart store and a soybean processing plant.

Just hours before Glickman's arrival in Beijing on Tuesday, Chinese police detained more than 100 members of the banned Falun Gong spiritual movement who had been demonstrating in Tiananmen Square on the one-year anniversary of an earlier crackdown.

Such heavy-handed tactics and the Beijing regime's poor record on other human rights issue have made the upcoming vote in Congress on establishing "permanent normal trade relations" with China one of the most controversial of the year.

Normalize Trade With China

Under an trade agreement negotiated last year, China has agreed to slash tariffs and open its markets for goods and services ranging from agriculture to telecommunications.

As its part of the bargain, the United States must discontinue its annual review of China's trade status and permanently normalize trade. That would ensure China will have the same low-tariff access to the U.S. market as most other nations.

While there are labor and human rights abuses in China, they do not tell the entire story of what's going on in the country, Glickman said.

"There's been such enormous change in China in the past twenty years," Glickman said.

Economic reforms have raised standards of living and made Western goods readily available to many Chinese citizens, particularly in cities such as Shanghai.

"It's just extraordinary, and in order for us to be a part of it and to influence it, we must be engaged," he said.

Two of the four congressmen accompanying Glickman on his trip have not decided how they will vote on PNTR. The issue is expected to be close in the U.S. House of Representative, but pass easily in the Senate.

At a news conference after arriving in Shanghai, both Representative Gregory Meeks, New York Democrat, and Representative Rubin Hinojosa, Texas Democrat, said they did not expect to make a decision by the time their visit to China ends on Sunday in Hong Kong.

The two other congressional members of the delegation -- Representative Norman Dicks, Washington Democrat, and Representative Greg Walden, Oregon Republican -- both support PNTR.: