China, US dialogue of global significance

(Agencies/chinadaily.com.cn)
Updated: 2008-12-04 16:23

Beijing has called on Washington to stabilize its precarious economy and protect its investments in America as the two sides opened strategic economic dialogues, which is overshadowed by the churning crisis of the global economy.

China's Vice-Premier Wang Qishan (L) speaks during the opening session of the 5th China-US Strategic Economic Dialogue in Beijing, December 4, 2008.[Agencies] More photos

"We hope the US side will take the necessary measures to stabilize the economy and financial markets, as well as to guarantee the safety of China's assets and investments in the United States," Vice Premier Wang Qishan told US Treasury Secretary Henry Paulson and other US officials at the Strategic Economic Dialogue in Beijing.

US Treasury chief Paulson said that the two countries now faced unprecedented challenges with a financial crisis that has battered the world since they last met half a year ago. "For the first time during the SED, the US and China will focus on how we can work together through international forums to strengthen the global economic system," he said at the start of the two-day event.

"The SED has improved the relationship between our two countries so that we can effectively manage complex issues, such as the recent global financial turmoil."

China is a major owner of US Treasury debt that finances Washington's budget deficit. The US dollar's recent weakness and the financial turmoil there have fueled Chinese anxiety about the safety of such holdings, analysts said.

US trade officials also pressed the Chinese side to pursue continued reform of their currency policies to ease trade imbalance, but Chinese participants say that the a stronger yuan has imperiled China’s exports and made many factories shut doors, forcing tens of thousands of workers lost their jobs. Economists also believe inexpensive Chinese goods have eased the living cost of American families, which would have been more difficult because of the ongoing economic crisis.

Nevertheless, Chinese officials affirmed their commitment to currency reform. This year, the value of Chinese yuan has gained 7 percent against the greenback, though its pace of appreciation has slowed recently.

The twice-a-year dialogue, launched in 2006, is meant to address the long-term growth of US-Chinese economic ties. But this round also focuses on how to manage macroeconomic risk, or the aftermath of a major credit crisis.

Standard Chartered Bank said on Thursday it expects Beijing to keep the currency steady or let it fall slightly against the dollar in early 2009 to mollify Chinese exporters, who have been hit hard by weakening global demand.

Paulson said he hopes to reach agreement on cooperation in energy, environmental protection and other areas at the two-day talks at Beijing’s state guesthouse.