12/13/2007, 00.00
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China and US to pursue economic co-operation, resist protectionism

The third round of the Sino-US “strategic economic dialogue” ends on statements of good will and agreements on important but secondary issues like food and toy safety. Little is said about exchange rates and the US trade deficit but Beijing shows some “openness” on the yuan. Co-operation on energy and financial markets is more promising.

Beijing (AsiaNews/Agencies) – The two days of the “strategic economic dialogue” between China and the United States have ended with both sides agreeing that talks must continue and co-operation must increase and not be limited to “secondary” matters like food and product safety and opening China’s financial services sector to foreign players.

“We also both recognise the need to fight economic nationalism and protectionism in our two nations,” US Treasury Secretary Henry Paulson said. “We must resist attempts to reduce transparency or increase regulatory obstacles in order to protect domestic industries.”

“The history of China-US business relations has repeatedly shown us that it is dialogue and consultation, not confrontation and finger-pointing, that have enabled the relations to grow,” said Ms Wu Yi, China's ‘Iron Lady,’ who added that both sides had achieved satisfactory results, a parting shot that appears to be especially directed at the United States where the semi-annual Sino-American meetings instituted in September 2006 have come under growing criticism for their limited results.

There seems indeed to be some movement even on the most divisive issues. Chen Deming, who was recently appointed vice-minister of Commerce and is expected to become minister in March, said Beijing was not opposed to a gradual adjustment of its currency, insisting however that it had to be done with caution. “What we oppose is a strengthening of the yuan that is too fast, abrupt and unreasonable,” Mr Chen said.

This in his view would be “inappropriate.” For him the pace of yuan appreciation should not be determined by those who want to see reductions in the mainland's trade surplus with the US, which now stands at US$ 238.13 billion, especially since US consumers have benefited from cheap imports.

US Secretary Paulson put the issue in a broader context, suggesting that a more “flexible exchange-rate” (i.e. a faster appreciation of the Yuan) and greater financial-market liberalisation are crucial for China’s macro-economic stability and the growing interdependence of the two economies, especially since “trade, [which] was once largely a source of stability in US-China relations, [. . .] has recently become a source of tension.

In the meantime the two countries have agreed on steps to ensure that Chinese-made toys and food products meet US safety standards and on the need for financial market liberalisation in China (albeit without defining how that is to be achieved).

The two sides also agreed to conduct extensive co-operation over a ten-year period “on measures to increase energy efficiency and security, including the further adoption of clean technology.”

The high number of officials included in the delegations headed by Paulson and Wu is a sign that both China and the United States want dialogue on each issue and thus favour talks on technical matters.

The next meeting is scheduled for Washington in June of next year. And both sides are arming themselves with patience given the intensity of domestic criticism.

US Trade Representative Susan Schwab cited China’s Xinhua as an example of unfair competition because the state-owned news agency not only issues annual licenses for overseas media organisations to distribute news in China, but also competes with them to sell information. It is in other words both “regulator as well as competitor.” (PB)

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See also
Beijing and Washington make many commitments, take few decisions, wait for Obama
Beijing and Washington to jointly discuss economic policies
US secretary in China to avoid trade war
Good will but few concrete results for the two countries
Washington calls on Beijing to take concrete steps on currency and trade


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