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Political

U.S., China talking trade

By ASSOCIATED PRESS
Published September 21, 2006

BEIJING - The United States and China are launching a new high-level economic dialogue meant to repair relations soured by trade tensions, U.S. Treasury Secretary Henry Paulson and a Chinese leader said Wednesday.

The strategic dialogue will deal with long-range and big-picture issues that affect the United States and China, Paulson and Chinese Vice Premier Wu Yi said in announcing the arrangement on the first day of Paulson's visit to Beijing.

Relations between the countries, once buoyed by robust trade, have deteriorated in recent years as China's trade surplus rockets ever higher and critics in Washington have accused Beijing of keeping the currency undervalued to make Chinese exports cheaper. Washington also wants Chinese help in restarting suspended world trade talks.

Neither Paulson nor Wu said whether the currency or the trade imbalance would be addressed in the dialogue. But Paulson suggested that it should put economic relations in a new perspective.

"As global economic leaders, we share responsibility to maintain open markets at home and promote free and fair trade in all countries," Paulson said. The dialogue "reflects the 21st century global economy and redefines the economic relationship between the United States and China."

Such talk was likely well-received in Beijing, which wants to be treated as an equal partner by Washington, and was in keeping with a new tone Paulson has sought to inject in U.S.-China relations.

Though making his first trip as treasury secretary, Paulson has visited China dozens of times as chairman of the investment bank Goldman Sachs, building extensive ties in Chinese business and political circles.

At the start of their meeting, Wu praised Paulson, saying that he "understands even more about China than many Chinese people" and called him a "true friend of China."

Paulson, while cordial, emphasized his commitment to addressing the thornier issues of China-U.S. trade relations in his new role.

"Because of the time that I have spent in China, I have learned how many common interests we have, how many interests we share, and I've also learned that some of the tensions that exist are also important and that it's very important that we find solutions to them," Paulson said.

Exchange rate reform is among steps that Washington wants China to take in order to cut its trade gap with the United States, which last year reached $202-billion and is expected to top that this year. Paulson, however, has said that he expects such reforms to take time.

Chinese leaders say they eventually will let the currency, the yuan, trade freely on world markets. But they say doing so immediately would cause economic turmoil, harming China's fragile banks and financial industries.

[Last modified September 20, 2006, 22:23:35]