Print

Mail

wiki links

Currency impasse mars US-China dialogue, deals

Chinese Vice Premier Wu Yi and US Treasury Secretary Henry Paulson leave the podium after delivering a joint statement during the US-China Strategic Economic Dialogue in Washington on Wednesday. PHOTO: AP

The US and China struck civil aviation and financial sector access deals on Wednesday but they made no headway on the divisive issue of Chinese currency reform, stoking anger on Capitol Hill.

Lawmakers said they would move ahead with proposals to slap tariffs on Chinese imports because of Beijing's reluctance to redress the huge trade imbalance between the economic giants with a revaluation of the yuan.

The anger in Congress overshadowed US Treasury Secretary Henry Paulson's claim of "tangible results" in the second leg of a "strategic economic dialogue" with Chinese Vice Premier Wu Yi (吳儀).

Wu said the "complicated" relations between Washington and Beijing needed careful handling and cautioned against retaliation.

"It calls for direct consultation and dialogue between us, instead of easy resort to threat or sanctions," Wu said after two days of closed-door talks with Bush administration officials.

An editorial in the China Daily said both countries bore responsibility for the trade gap between them and warned against US impatience for a rapid cure.

"The dialogue made it clear that a confrontational approach focusing on so-called immediate results only complicates the situation and adds nothing to problem solving," it said.

China's stellar economic growth was indeed too dependent on exports, the daily said, but it was also "all too obvious that the US consumers spend too much and save too little, resulting in their country's current account deficit."

Tension was heightened during the talks by mounting concern about the safety of Chinese exports after reports about toxic toothpaste and contaminated pet food.

US officials said they stressed that food and medicine safety was a "top concern."

The most concrete outcome of the talks was a deal committing China to remove a bar on new foreign securities firms and resume issuing licenses for securities companies, including joint ventures, but not the lifting of caps on foreign ownership of banks, securities firms and insurance companies that US firms had sought.

That was a coup for Paulson, who has made gaining greater access to the Chinese financial sector a key objective.

The two sides also agreed on a new aviation pact that US transportation officials said would more than double the number of daily passenger flights between the two countries by 2012, going from 10 to 23. The gains fell short of the openings the Bush administration had hoped to achieve.

Meanwhile, Chinese Vice Commerce Minister Ma Xiuhong (馬秀紅) said a Chinese business delegation on a 24-state US tour had signed US$32.6 billion in deals so far.

The buying spree appeared to be timed to soften US congressional criticism of China's practice of managing the yuan, in a way that US lawmakers and companies complain makes Chinese products unfairly cheap in US markets.

But the chairman of the powerful House of Representatives Ways and Means Committee, Democratic Representative Charles Rangel, said after a meeting between Wu and the committee that the Chinese told lawmakers they needed more time to implement reforms such as overhauling their currency system.

Rangel said that his committee planned to move ahead with legislation. One proposal would impose stiff penalties on Chinese imports for what critics say are unfair Chinese trade practices that have driven US trade deficits to record levels and cost thousands of manufacturing jobs.

Democratic Senator Charles Schumer, a leading critic of China, described the frustration he said his colleagues felt.

"There's never any action," he said. "I don't think a press release is going to assuage Congress' worries. We need results."

The head of China's central bank, Zhou Xiaochuan (周小川), said China had pressures of its own to deal with that made it hard to speed up currency reform.

"They may think that we can accelerate the speed of reform, but we think that we already try our best, and domestically we have pressure to slow down," he said. "We agree on the general direction of currency reform. There's probably a little bit of difference on how fast we should carry it out."
This story has been viewed 1828 times.