Second round of talks gets under way
Cary Huang in Beijing
President Hu Jintao promised yesterday that Beijing would proceed with reform of its controversial exchange rate controls, while US Treasury Secretary Timothy Geithner called on China to reduce trade barriers to develop a more balanced global economy.
Hu said Beijing would implement reform according to its own agenda, while Vice-Premier Wang Qishan urged the United States to provide details and a timetable for its planned relaxation of restrictions on hi-tech exports to China.
But both sides appeared more willing to compromise in dealing with long-standing bilateral stumbling blocks including trade and currency concerns, and pledged to work together in the face of growing uncertainties stemming from the euro-zone debt crisis.
'China will continue to steadily advance the reform of the formation of the renminbi exchange rate mechanism under the principle of independent decision-making, controllability and gradual progress,' Hu said yesterday during the opening ceremony for the biannual strategic and economic dialogue.
The second dialogue meeting, following one in Washington in July, is a two-track affair over two days. The economic track is chaired by Wang and Geithner, with the strategic track chaired by State Councillor Dai Bingguo and US Secretary of State Hillary Rodham Clinton.
In a sign of the importance Washington has given to the meeting, about 200 US officials have come to Beijing - a number Clinton said she believed was unprecedented.
'We hope to hear from the US side in detail its timetable and roadmap on gradually removing barriers to hi-tech exports to China, giving equal treatment to Chinese enterprises investing in the US, and recognising China's market economy status,' Wang said at a speech before the economic talks.
In prepared remarks at the same occasion, Geithner indirectly urged China to ease up on its 'indigenous innovation' policies aimed at giving Chinese companies a larger share of new cutting-edge technologies developed in China.
'Innovation holds the key to a more prosperous future, and innovation flourishes best when markets are open, competition is fair, and strong protection exists for ideas and inventions,' Geithner said.
Commerce Minister Chen Deming said no progress had been made on US recognition of China's market status.
The US top priorities are market access to the Chinese market and demanding that Beijing scrap discrimination against foreign firms in government procurement and in its protection of indigenous innovation. US companies would like more access to China's US$82 billion government procurement market and see the Chinese market as being of great potential for US hi-tech products.
Jing Ulrich, chairman of JPMorgan's China equities and commodities, said with US unemployment running at 9.5 per cent, increasing competitiveness with regards to China was no doubt high on the American political agenda. US officials were therefore keen to concentrate attention on policies that they say unfairly impede US companies hunting for customers in China.
Geithner made no direct reference in his remarks to pressing China to resume the yuan's appreciation, but emphasised Washington's interest in a more flexible currency.
Analysts said there had been concern on the US side that the sovereign debt crisis in Europe might prompt Beijing to delay the resumption of currency appreciation because of fears about exports to Europe.
Europe did come up during the talks. In a briefing after the morning session, central bank governor Zhou Xiaochuan confirmed that both sides 'spent a lot of time discussing the euro debt crisis'.
'Our common interests lie in building a more stable global financial system less prone to crisis,' said Geithner, who leaves Beijing tonight for talks in Britain and Germany on stabilising the European economy.