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US, China headed for possible currency clash
BEIJING (AP) - The deepening world economic crisis and a possible spat over currency levels hung in the air as the United States and China sat down Thursday to discuss the future of their economic relations. U.S. officials say Treasury Secretary Henry Paulson will press Beijing to let its yuan rise against the dollar to ease trade tensions at the two-day Strategic Economic Dialogue. American companies contend that China keeps the yuan undervalued, giving its exporters an unfair advantage and adding to its swollen trade surplus.But with China's exporters suffering, the yuan plunged Monday in government-controlled tradinga possible message to Washington to go easy on the issue. "The signal China sent on Monday is: We also have our own political problems and issues in a slowing economic environment," Frank F.X. Gong, chief Asia economist for JPMorgan Securities Ltd., said in a report to clients. State media said Thursday a rapid rise of the Chinese currency would harm the global economy further as it would hurt Chinese exports and increase unemployment. "China's foreign exchange policy should be aimed at helping domestic economic growth, for which the yuan should not rise too fast against the U.S. dollar now when the global financial market is in turmoil," said a report Thursday in the China Daily, an English-language newspaper aimed at foreign readers. The twice-a-year dialogue, launched in 2006, is meant as a relationship-building exercise rather than a forum for negotiation. But Treasury Undersecretary David McCormick told reporters this week that officials at the dialogue would urge China to continue allowing the yuan to risea key issue for American lawmakers who are pressing for punitive action if Beijing fails to take faster action on trade complaints. Both economies are strugglingthe United States with a recession and China with a sharp slowdown in growthand how well they keep one of the world's biggest trading relationships stable and productive could be of global importance. "The need to coordinate and collaborate gets even more urgent as the current recession bites deeper," the China Daily said in an editorial Thursday. Posted by: Steve White 2008-12-04 |
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