China seeks to allay US fears on yuan
06 May 2011
China has sought to strike a conciliatory note, particularly on the vexed issue of the 'undervalued' yuan, as it prepares for a new round of bilateral trade talks with the US. Chinese and US officials will meet in Washington for a new round of bilateral trade talks next week.
China's vice minister of finance Zhu Guangyao told newspersons in Beijing today that China was not deliberately seeking a trade surplus with the US, but is focused on long-term reform.
"China's position is clear - that we are not deliberately pursuing a large trade surplus," Zhu said ahead of the annual 'strategic and economic dialogue' beginning Monday.
"This is a mutually beneficial, win-win economic relationship," he added.
Zhu also said the two sides agree on the general direction for yuan reform, but have differences over the rate of reform. The US is more focused on the extent of appreciation while China is focused on a long-term reform process, he said.
He reiterated China's position that the exchange rate issue was a matter of China's own sovereignty. Zhu added that managing China's growing foreign exchange holdings was "challenging".
A key cause of trade friction between Beijing and Washington is the US trade deficit with China. The US trade deficit with China in 2010 rose to $273.1 billion, a 20.4 per cent increase over 2009.
As a result, top US officials, including treasury secretary Timothy Geithner, are expected to press China to allow the yuan to appreciate more rapidly.
China recorded a trade deficit in the first quarter of this year, for the first time in many years, largely as a result of high prices of commodities like food and fuel.