BEIJING — The U.S. has pushed China once again toward agreeing in principle on adopting a more market-oriented exchange rate, but with no firm details on how or when that might happen.
In closing two days of top-level trade and economic talks in Beijing, U.S. Treasury Secretary Jacob Lew said China had pledged to further ease its firm controls on its currency — long a thorn in the U.S.-China trade relationship.
“China is making preparations to adopt greater transparency including on foreign exchange, which will accelerate the move to a more market-based exchange rate,” Lew said in a news conference at the end of the Strategic and Economic Dialogue, or SED, an annual set of discussions on key Sino-U.S. issues.
On Wednesday, the first day of discussions, China’s finance minister said his country has no plans for additional economic stimulus measures. China’s economy, largely powered through aggressive government spending programs, has been credited with bolstering the global economy through the crisis that began in 2008. Minister Lou Jiwei said its now up to the U.S. to step up and work as a global growth engine.
Lou said that China believes the global economic recovery is still in a critical transition point, and the Chinese government does not yet believe that it can adopt a completely free-market-based exchange rate. China has credited its freeze on the yuan’s value at the start of the economic meltdown for helping this country, and the region, survive and thrive through turmoil. But it has retained a fairly strict peg since, leading to renewed calls from the U.S. and other trade partners that an unnaturally fixed currency provides China with an unfair trade advantage.
This round of talks, the sixth such yearly meetings, comes at a time when U.S.-China relations are mired in problematic issues. The two have been embroiled in multiple spats during the past year, including charges and counter-charges of cyber-espionage.
Lew led the American delegation in Beijing, accompanied for some of his trip by Secretary of State John Kerry. The teams discussed everything from the illegal wildlife trade to currency rates — a perpetual burr in the bilateral relationship.
As it has gained in global economic power, China has become increasingly petulant about bilateral issues. The underlying message for these meetings from China’s official media has been to place the burden of compromise on the U.S.
“It is the United States that should take the initiative to demonstrate to the world that, even facing negativity and potential alienation in bilateral relations, the two powers still stick to the dialogue mechanism to ensure that cooperation and consultation define the overall relationship,” the official Xinhua new service wrote in an editorial about the talks.
During the opening ceremony for the talks, Chinese President Xi Jinping urged cooperation, but did not get into specifics.
“China and the United States’ interests are deeply interconnected. Cooperation will lead to win-win results while confrontation will hurt both,” he said.
In addition to a note of agreement in principle about currency, the SED also agreed to strengthen economic policy cooperation between the two countries. Both sides said that they will work on “fostering an open, transparent, and non-discriminatory environment for trade and investment.”
China, meanwhile, promised to further deepen its commitment to market-oriented economics and the reform of its state-owned enterprise system. China also used the platform to further its pitch for technology transfers from the U.S. for non-military and non-government use, and reiterated a commitment that domestic demand will become a key driver of its economy.