BEIJING — China will move forward on its own timetable with revaluation of its currency, President Hu Jintao said Monday at the opening of top-level talks between Chinese and U.S. leaders.
This story first appeared in the May 25, 2010 issue of WWD. Subscribe Today.
Hu, speaking in Beijing at the opening of the second U.S.-China Strategic & Economic Dialogue, touched briefly on the currency issue — a topic that’s expected to take high priority for the U.S. in these negotiations. Hu did not reveal any details about China’s plans for the yuan.
“China will continue to steadily push forward reform of the yuan exchange-rate formation mechanism in a self-initiated, controllable and gradual manner,” said Hu.
The summit, which is held behind closed doors, is expected to touch on an even broader range of topics than before — from environmental technology and high-speed rail to currency and China’s demand for the U.S. to expand technology transfers. The exchange-rate debate is central to the two countries’ trade relationship, as the U.S. pushes for China to drop a de facto peg to the U.S. dollar that began with the onset of the global financial crisis toward the end of 2008. The Obama administration, like its predecessors, argues China’s exchange currency is undervalued, giving it an unfair advantage.
In her remarks at the opening, U.S. Secretary of State Hillary Clinton said the talks should also touch on security issues like North Korea, plus continue to push for progress on areas like the economy and environment.
“Now, our discussions in these few days are unlikely to solve the shared challenges we face, but they can and should provide a framework for delivering real results to our people,” said Clinton. “We will not agree on every issue, but we will discuss them openly, as between friends and partners.”
During the two-day talks, Chinese leaders will meet with Clinton and others from the Obama cabinet, including Treasury Secretary Timothy Geithner and Commerce Secretary Gary Locke. The summit ends today with a joint press conference likely to unveil some new cooperative agreements.
In Geithner’s remarks at the opening of the economic section of the talks, he touched on the currency issue.
“Allowing the exchange rate to reflect market forces is important — not just to give China the flexibility necessary to sustain economic growth with low inflation but also to reinforce incentives for China’s private sector to shift resources to more productive, higher-value-added activities that will be important to future growth,” said Geithner.
Chinese political scientists said that although these top-level talks don’t typically produce dramatic results, they are essential to keeping Sino-American trade relations on the right track.
“[The dialogue] is not a fire brigade, it is not set to solve specific problems,” said Zhu Feng, an international studies professor at Peking University. “We have the SED because relations between the two sides have been very important, and we need to set a framework for how to solve potential problems on specific issues in the future.”