During two days of talks, the U.S. and China agreed to narrow their huge trade imbalance but key points of dispute were not resolved, the chief delegates from each side said Dec. 15. "We each will take measures to address imbalances, encourage greater national savings in the U.S. and to increase consumption and exchange rate flexibility in China," U.S. Treasury Secretary Henry Paulson said.
Paulson brought six other members of U.S. President George W. Bush's cabinet, plus Federal Reserve Chairman Ben Bernanke, to Beijing for the inaugural "strategic dialogue", a forum aimed at easing deep trade tensions between the two nations.
Chinese President Hu Jintao told Paulson that the dialogue reflected mutual cooperation that was now at a "turning point", state television reported. "We should handle the problems in our economic and trade cooperation through candid exchanges and friendly consultation and with a positive attitude," Hu said.
The U.S. urged China during the talks to take faster action on a range of reforms, with loosening controls on its currency, the yuan, among the most pressing of priorities.
In a speech in Beijing following the end of the talks, Bernanke issued another strong call for further flexibility in the yuan, saying such a move would help China's domestic economy as well as ease global trade imbalances. Bernanke said China's central bank must make massive purchases of dollars to keep the yuan, or renminbi, in a tight trading range, and that its current policy limited its ability to deal with a crisis.
Aside from the currency, other key issues raised by Paulson and his team were the rampant abuse of copyright in China and the importance for it to continue to open up its markets.
The bottom line for the hoped-for reforms is to narrow the U.S. trade deficit with China that threatens to hit a record $240 billion this year. Elaine Chao, the U.S. labor secretary, said the two sides had discussed how to improve China's social system in order to persuade the Chinese that they could bring down their huge savings and consume more.
"We discussed how to develop a private pension plan and a government pension plan to boost the confidence of Chinese citizens to consume more, buy more U.S. goods and create more U.S. jobs," Chao said.
China's chief delegate, Vice Premier Wu Yi, characterized the talks as "highly useful" but emphasized the two nations could not find agreement on a range of issues. "There were quite a number of areas of consensus but also quite a number of differences," she said at a joint press conference with Paulson. "It's understandable that we would have differences because the U.S. and China are two very different countries. The key lies in what attitude we take to embrace those differences."
Copyright Agence France-Presse, 2006
