Fri, May 04, 2012 - Page 10 News List

US presses China over yuan in talks

ROCK AND A HARD PLACE:With US officials saying the yuan is undervalued and Beijing talking of only ‘limited’ yuan gains, agreement at their two-day meeting seems unlikely

AP, BEIJING

US Secretary of the Treasury Timothy Geithner urged Beijing to let its tightly controlled currency strengthen and improve market access amid trade strains at a high-level economic dialogue yesterday.

This week’s talks, over-shadowed by a diplomatic tussle over blind Chinese legal activist Chen Guangcheng (陳光誠), come as a weak global economy and pressure on the governments of developed countries to reduce unemployment are fueling trade complaints against China.

Washington considers “particularly important” the promise of a stronger yuan in China’s latest five-year economic development plan, Geithner said in prepared remarks for the opening of the two days of talks.

In more pointed language last month, Geithner complained that an undervalued yuan was a source of “unfair competition.” He called for a “stronger, more market--determined” exchange rate and said that would help the global economy.

Chinese officials have said that future gains by the yuan are likely to be limited, setting up a possible clash with Washington.

Chinese Premier Wen Jiabao (溫家寶) said in March that the currency might have reached an “equilibrium exchange rate.”

US officials also pressed China to create a more “level playing field” for foreign companies by removing import barriers, said the official, who briefed reporters about the talks on condition of anonymity.

The US reported its trade deficit with China reached an all-time high of US$295.5 billion last year, up 8.2 percent from the previous record in 2010.

The US Department of Commerce announced last month it would impose new import fees on Chinese-made solar panels after concluding that manufacturers received improper subsidies.

Beijing announced its own probe in November last year into whether US support for renewable energy companies hurts foreign suppliers.

Beijing’s envoy to the economic talks, Chinese Vice Premier Wang Qishan (王岐山), called on Washington to ease controls on exports of high-tech goods. Such controls are imposed on “dual-use” goods such as supercomputers with possible military applications.

Talks were continuing on loosening export restrictions and smoothing the way for more Chinese investment in the US, according to the US official.

Wang called for more US co-operation with Chinese companies on building highways, ports and other infrastructure. China’s construction companies have built dams, roads and bridges in Africa and developing Asian countries and say they want to expand into European and US markets.

Geithner expressed support for China’s plans to overhaul its financial system to increase support for private enterprise and reduce special treatment for state-owned companies.

He said the plans reflect Beijing’s recognition that it has to rely more on private sector innovation and allow more competition from foreign companies.

“The US has a strong interest in the success of these reforms,” he added.

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