Paulson notes rise in Chinese currency

From combined dispatches

BEIJING — The Chinese currency’s appreciation against the dollar has been picking up speed and has climbed almost 10 percent since China eased its fixed currency regime two years ago, U.S. Treasury Secretary Henry M. Paulson Jr. said yesterday.

“The rate of appreciation has gone up considerably over the last year and the renminbi [yuan] has now appreciated well over 9 percent,” he told reporters on the way to China for economic and trade talks.

Although progress has been made on that key sticking point, it is unrealistic to expect the talks to erase trade tensions between the two nations, he said. Mr. Paulson is in northwest China to discuss environmental issues and is scheduled to meet with Chinese President Hu Jintao and Vice Prime Minister Wu Yi in Beijing later this week.

“President Hu is going to do exactly what he believes is in the best interests of China,” he told reporters in Xining, capital of Qinghai province, where he has been inspecting Chinese environmental projects. He nevertheless repeated that official dialogue is more effective at managing the tension than legislative threats.

Mr. Paulson is making the visit as Congress steps up pressure on China to allow a rise in its currency to correct what economists say is chronic undervaluation of as much as 40 percent.

U.S. lawmakers argue that the undervalued yuan makes U.S.-bound exports cheaper, thereby fueling the trade deficit with China, which hit $232.5 billion last year.