China says lessons learned from U.S. economic woes
ANNAPOLIS, Maryland |
ANNAPOLIS, Maryland (Reuters) - U.S. and Chinese officials agreed on Tuesday that turbulence sweeping global markets holds lessons for Beijing, but the United States warned it should not cause China to block access to its markets.
On the opening day of a two-day "strategic economic dialogue," the head of China's central bank said the United States used to be a model for how to manage an economy, but was of interest now because of mistakes it made that caused the subprime mortgage crisis.
"Now, apart from wanting to learn the U.S.'s experience in macroeconomic policy, we also want to learn some of the lessons they have learned as a result of the turbulence," governor of the People's Bank of China, Zhou Xiaochuan, told reporters at a briefing at the U.S. Naval Academy where the talks were held.
Zhou said the weakened U.S. dollar was not a specific topic of talks but that the role of exchange rates in keeping markets stable was discussed, an apparent allusion to China's long-standing position that it cannot rush appreciation of its yuan currency for fear of creating havoc in its markets.
Alan Holmer, the U.S. Treasury's special envoy to China, responded that Beijing should not cite U.S. woes as an excuse to keep foreign participants out of its financial markets because it would hurt itself by doing so.
"There are lessons to be learned from economic developments in the U.S. ... but there would be significant costs to China if they were to slow down with respect to their financial sector liberalization," Holmer said.
U.S. Treasury Secretary Henry Paulson was instrumental in launching the semi-annual dialogue in December 2006 in recognition of China's growing importance in the global economy and as a way to look past short-term trade frictions and find common ground.
"Sometimes we may ... disagree quite strongly, but we keep talking," Paulson said, adding that he felt the time was right for making progress on bilateral energy and environmental issues.
With the Bush administration winding down, China is widely thought to be looking past it to the next U.S. government before making deals but Paulson's Treasury is pushing hard for any success that will keep the strategic economic dialogue alive after year-end.
According to U.S. business sources, the two countries are expected to announce plans to negotiate a bilateral investment treaty when they wrap up talks on Wednesday. It would offer a forum for resolving investment disputes and a platform for reducing some of the barriers to investment that the U.S. side says China maintains in particular.
The Chinese delegation is led by Vice Premier Wang Qishan, who said the talks were especially important when both economies were under stress and said Beijing was trying to address U.S. calls for China's currency to rise in value.
"But solving some types of problems requires a process and needs to consider China's national conditions and stage of development," Wang said. "We hope the U.S. will place great emphasis on China's concerns."
There is more interest now in discussing bilateral energy and market-opening issues with China rather than an ongoing currency dispute, since China's yuan -- also called renminbi -- has risen in value by about 20 percent in the past few years.
Holmer referred to the Chinese currency's rise against the dollar as a positive development.
"It is significant and welcome and we hope that it will continue," he said.
The yuan's value has been a long-standing sore point for U.S. manufacturers who claim the currency is undervalued and gives China an unfair trade advantage.
Critics in U.S. Congress claim the U.S.-China talks have produced relatively few concrete results and they periodically threaten legislative action to try to force a swifter revaluation of China's currency.
Wang suggested that such a course would not work with Beijing.
"When conflicts or problems arise, we need to solve them through dialogue and communication and improve mutual understanding ... to avoid complicating and politicizing economic and trade issues," Wang said.
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