U.S. and Chinese officials completed two days of economic talks here Wednesday without a breakthrough on the issue of China's currency controls, leading to renewed threats from Congress to pass legislation intended to restrict trade.
WASHINGTON — U.S. and Chinese officials completed two days of economic talks here Wednesday without a breakthrough on the issue of China's currency controls, leading to renewed threats from Congress to pass legislation intended to restrict trade.
Treasury Secretary Henry Paulson Jr. has come under rising pressure to get concessions from China because U.S. manufacturers and labor unions contend that China keeps the yuan artificially weak, making goods cheaper and costing Americans jobs.
"I pressed for greater flexibility in the short term and for a transition to a market-determined exchange rate in the medium term," Paulson said during a news conference after the close of the talks, called the Strategic Economic Dialogue.
Paulson and other Bush administration officials stressed that the biannual meetings are long-term in nature and are not intended as negotiating sessions on single issues. But Capitol Hill lawmakers want to see movement on controls that they say restrain the value of the yuan by as much as 40 percent.
The currency issue has taken on a life beyond its economic significance, Paulson said.
"It is important in trade flows, but even more importantly, it has become a symbol for the pace of reform of the Chinese economy," he said, noting that China also wants to transform its economy. "Where we differ is not over the goals, but the pace of change."
Last week, China increased the amount the yuan can fluctuate each day to 0.5 percent from 0.3 percent, but it isn't clear how much government policy makers will allow the currency to appreciate.
Vice Premier Wu Yi, who led the Chinese delegation, said the discussions covered "hot spots," but characterized the bilateral forum as a "complete success."
"China and the United States are closely linked to each other and interdependent," Wu said in her closing remarks.
She stressed the importance of direct consultation and dialogue rather than the "easy resort" to sanctions, referring to the more aggressive stance the U.S. has taken in the trade arena. The Bush administration this year filed three World Trade Organization cases against China on intellectual property protections and state subsidies, and changed a long-standing Commerce Department policy, opening up China to countervailing duty trade cases.
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