No short-term fixes, but Beijing pledges more yuan flexibility and Washington more domestic savings
China and the United States made broad pledges to tackle global economic imbalances yesterday as they concluded two days of high-level economic talks but they failed to produce tangible measures to address short-term concerns.
Beijing promised to make the yuan more flexible and boost domestic consumption while Washington agreed to increase its national savings rate, US Treasury Secretary Henry Paulson said.
'We each will take measures to address imbalances, encourage greater national savings in the United States and to increase consumption and exchange rate flexibility in China,' Mr Paulson said in a joint press conference with Vice-Premier Wu Yi after the talks.
The First China-US Strategic Economic Dialogue concluded at noon yesterday with a communique and statements from Mr Paulson and Ms Wu. Both sides agreed to hold a second round of talks in Washington in May.
The two sides also agreed to set up working groups to cover health care, aviation, energy and the environment. The only modest substance to emerge was that the mainland agreed to let the New York Stock Exchange and Nasdaq open offices in Beijing, while Washington gave the green light for China to join the Inter-American Development Bank.
Mr Paulson, under pressure to get results on issues such as currency reform because of rising protectionism at home, said the talks were 'frank and unusually useful'.
Chinese leaders put on a more positive spin. Meeting the US delegation after the talks, President Hu Jintao characterised the dialogue 'a big success', Xinhua said.
In a separate meeting, Premier Wen Jiabao said the dialogue was unprecedented and would exert far-reaching influence, Xinhua reported. 'This dialogue has drawn wide attention from European countries and Japan. They would like to follow suit,' he said.
In the communique, the two sides said they agreed that increased yuan flexibility would be key to reducing trade imbalances, but did not announce specific measures to accelerate such reform.
'Where there's a difference is on the speed of reform,' Mr Paulson said. 'We both want China's economic development to be stable but we have a point of view that there's more risk in going too slowly than there is in going too fast and the Chinese see that differently.'
Washington hopes that a more flexible yuan would help narrow the US trade deficit with the mainland, which hit a record US$202 billion last year and is expected to grow further this year.
Ms Wu also characterised the talks as 'highly successful' but emphasised the two nations could not find agreement on a range of issues.
'There were quite a number of areas of consensus but also quite a number of differences,' she said. 'It's understandable that we would have differences because the US and China are two very different countries. The key lies in what attitude we take to embrace those differences.'
Official mainland media yesterday called for a long-term view of bilateral relations.