- The Washington Times - Wednesday, July 29, 2009

The United States opened the door Tuesday to giving China a greater role in the world economy and senior positions at the leading international financial institutions, a tacit recognition of the growing role China is playing in the U.S. economy.

Zhou Xiaochuan, governor of the People’s Bank of China, said during two days of high-level talks in Washington that Obama administration officials had agreed that emerging economies - including China - should enjoy a “greater voice and representation” on the international financial scene.

He added that U.S. officials had promised to support “qualified candidates from China being given full consideration” to assume high-level positions with international financial institutions such as the World Bank, International Monetary Fund and other global economic bodies.

The concessions reflected the growing economic interdependence between the United States and China, a major supplier of U.S. consumer goods that saw its growth sharply curtailed when America succumbed to recession.

Speaking at the end of the two days of talks Tuesday, Treasury Secretary Timothy F. Geithner glossed over contentious issues of currency, trade and the U.S. budget deficit in favor of emphasizing areas of agreement.

“The forceful policy responses by China and the United States have helped pull the global financial system back from the edge of failure,” Mr. Geithner said at a post-summit news conference.

The United States, striving to ease the fears of Chinese investors who have acquired hundreds of billions of dollars in U.S. debt, promised to reduce its soaring budget deficit, which is projected to hit a record $1.84 trillion this year.

For its part, China vowed to work toward a key U.S. goal that it foster greater domestic growth to reduce its reliance on exporting goods to the United States.

The two sides publicly sidestepped the issue of the low value of China’s currency, which Western economists say is grossly undervalued and contributes to America’s widening trade deficit with the Asian giant.

The head of China’s central bank rocked markets worldwide in March when he suggested that the U.S. dollar be replaced as the world’s key reserve currency by an alternative currency or basket of currencies.

Mr. Zhou declined to comment on the matter Tuesday.

Mr. Geithner said earlier Tuesday that strengthening the economies of developing countries was vital to securing global financial stability and avoiding a repeat of the recent near meltdown of international credit markets.

“Today, we will discuss governance reforms to help the [international financial institutions] be more representative of dynamic emerging economies, such as China, as well as strengthen their capacity to prevent future crises,” he said.

Mr. Zhou also said his country has vowed to implement reforms to stabilize its financial markets, which Western governments say lack sufficient regulation and transparency.

The central banker said China is “committed to reform and opening up, and promoting market development, which are essential for building a robust financial system.”

Mr. Geithner also said Tuesday he wanted a more open trading system with China.

“We will discuss additional measures that our two countries can take to support an open trading system, discourage protectionist policies and to take advantage of what trade and investment have to offer,” Mr. Geithner said.

Secretary of State Hillary Rodham Clinton, who described the talks as “unprecedented,” said the United States and China have agreed to cooperate on difficult foreign-policy challenges such as North Korea and Iran, as well as counterterrorism.

Mrs. Clinton also said both sides agreed to work together on climate-change issues and to accelerate a transition to a sustainable low-carbon economy.

The two countries treaded lightly on the thorny issue of reported human rights abuses in China. Mrs. Clinton, who took part in the talks, said the U.S. delegation raised concerns about human rights with the Chinese.

“Human rights is absolutely integral” to U.S.-China relations,” she said. “It is a part of our policy, not only with China, but with other countries.”

But the Chinese delegation said U.S. officials told them that human rights issues in China were a domestic affair.

As the two countries held news conferences to close out the event Tuesday afternoon at the Eisenhower Executive Office Building adjacent to the White House, about 100 anti-China protesters demonstrated outside in support of China’s minority Uyghur minority, who long have complained of violence and abuse by the Chinese communist government.

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