- The Washington Times - Friday, December 15, 2006

BEIJING (AP) — American and Chinese officials pledged yesterday to work on reducing China’s swollen trade surplus, but ended two days of closely watched talks with little progress on currency and other disputes that are straining ties.

U.S. Treasury Secretary Henry M. Paulson Jr. said China would pursue currency flexibility, long sought by Washington. But he seemingly came away with little more than Beijing’s standard statement that it will relax currency controls and enact market-opening reforms at its own pace.

U.S. Federal Reserve Chairman Ben S. Bernanke, a member of Mr. Paulson’s high-profile delegation, also urged Beijing to take faster action on its currency. He said a stronger yuan would boost living standards and help ordinary Chinese as well as promote global economic stability.

The two sides promised to start discussions on opening China’s service industries wider to foreign competition and on cooperating in environmental protection and developing cleaner energy sources.

The talks were billed as the start of a long-term “strategic economic dialogue” created in August by President Bush and his Chinese counterpart, Hu Jintao, in hopes of easing irritants that might derail one of the world’s biggest trade relationships.

“We agree on the need for balanced, sustainable growth in China without large trade imbalances,” Mr. Paulson said at a press conference before returning to Washington.

But he acknowledged the two sides need shorter-term “tangible successes along the way” to sustain support for free trade. He said he could only speculate on whether this week’s outcome would satisfy U.S. critics who want tough action against Beijing.

“I can only say I am very pleased with what we have accomplished, because we’ve got some immediate tangible results, some that are symbolic, but I think symbolically important,” he said.

At a briefing earlier with reporters, Mr. Paulson and his Chinese counterpart, Vice Premier Wu Yi, said the wide-ranging talks laid the foundation for progress in future trade meetings. In a reflection of the amicable atmosphere, the pair held hands as they arrived at the event in the Great Hall of the People.

“This dialogue has helped both of us to build mutual understanding and enhanced trust,” Mrs. Wu said.

The Bush administration faces growing pressure from American business groups and Democrats in Congress for action as trade deficits with China mount steadily, reaching $24.4 billion in October. The annual U.S. deficit is on pace to top last year’s record $202 billion level.

Critics say Beijing keeps the yuan undervalued, giving its exporters an unfair price advantage and hurting foreign companies.

In a potentially discouraging sign for Americans hoping for faster action on trade, Mrs. Wu indicated that Beijing views the talks as a way to make clear to Washington the constraints that it faces.

Energy Secretary Samuel W. Bodman, a member of the delegation, said China agreed to join the FutureGen project, meant to create a low-emissions coal-fired power plant. He said the two sides would discuss other possible cooperation in energy and conservation.

The two sides agreed to hold the second round of meetings in May in Washington.

Also yesterday, Chinese Finance Minister Jin Renqing said Beijing agreed to allow the Nasdaq Stock Market and New York Stock Exchange to open formal business offices in China.

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