labels: economy - general
China warns US on economic "confrontation" news
24 May 2007

Beijing: Attempts by the US to force a "confrontation" with China will not solve trade friction between the two countries, the Chinese state media said today, urging greater cooperation after talks failed to resolve key sticking points.

A 16-member cabinet level delegation from China arrived in the US this week for top-level trade discussions.

In an editorial this morning, The China Daily said that both countries were responsible for the trade gap between them and warned against US impatience for a rapid cure. "The dialogue made it clear that a confrontational approach focusing on so-called immediate results only complicates the situation and adds nothing to problem solving," it said.

While acknowledging that China''s economic growth was too dependent on exports, it said, it was "all too obvious that US consumers spend too much and save too little, resulting in their country''s current account deficit".

The Chinese paper said "protectionism" could not fix the trade imbalance. "What''s needed are painful but necessary structural changes in the two countries'' economies."

US Treasury secretary Henry Paulson claimed "tangible results" at the end of a "strategic economic dialogue" with Chinese vice premier Wu Yi in Washington yesterday.

Despite being able to arrive at a deal on civil aviation and financial sector access in their second such meeting, the negotiators from the two countries made no headway on the emotive issue of Chinese currency reforms, fuelling anger among US lawmakers on Capitol Hill.

US lawmakers hope to force Beijing to revalue its yuan and redress the huge trade imbalance between the two pillars of global economic growth and have warned that they would push forward proposals to slap tariffs on Chinese imports.

In July 2005, Beijing abandoned an 11-year-old practice of holding the yuan fixed against the dollar and revalued it by 2.1 per cent. However, since then it has risen a further 6 per cent, raising worries about further increasing the US trade deficit with China, which rose to a record high of $233 billion in 2006.

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China warns US on economic "confrontation"