China Committed To Currency Flexibility

Wednesday, August 1st 2007, 7:37 am

By: News On 6

BEIJING (AP) _ U.S. Treasury Secretary Henry Paulson said Wednesday he was assured that China is committed to currency flexibility and more financial reforms, but Beijing offered no specific changes that could help assuage Congressional ire over China's huge trade surplus.

``I heard from everyone, right up to the top, they are committed to currency flexibility, to currency reform,'' Paulson told reporters after two days of trade talks with Chinese leaders.

Chinese officials said they plan to lift a moratorium on U.S.-Chinese securities joint ventures in early autumn, instead of December as originally planned, Paulson said.

The secretary, Washington's point man on China, is trying to avert drastic action by congressional critics of Beijing's trade record who are pressing for punitive action.

China had not been expected to offer concessions during the visit. But Paulson was expected to use the trip to try to persuade Congress that his 10-month-old ``Strategic Economic Dialogue'' is making progress.

Paulson said he discussed that process in meetings with Chinese President Hu Jintao and Vice Premier Wu Yi, Beijing's top envoy to the dialogue. Paulson said he made the case to the Chinese that they would benefit from faster appreciation of the country's currency, the yuan. But he gave no indication that they promised a faster rise or any other specific changes.

The secretary declined to give a detailed account of his talks with Hu and Wu, saying that would diminish the value of such private meetings.

The Chinese government also agreed to hold a meeting in October of the U.S.-China Joint Economic Commission, a forum for discussing financial issues, Paulson said.

A key irritant in U.S.-Chinese trade relations is complaints that Beijing keeps the yuan undervalued, giving its exporters an unfair price advantage and adding to its multibillion-dollar trade surplus.

Chinese leaders say they plan eventually to let the yuan trade freely on world markets. But they say acting too abruptly will hurt China's frail banks and cause financial turmoil.

The Senate is considering two bills aimed at pressuring China to overhaul its currency system.

Paulson rejected such legislative measures, saying they would harm Washington's efforts to encourage Beijing to reform.

``Legislation would be counterproductive and would undermine what we're trying to do here,'' Paulson said.