- The Washington Times - Wednesday, April 1, 2009

WASHINGTON (AP) - The Obama administration said Wednesday it will continue high-level talks with China started under the Bush administration, but will only hold one per year while expanding the scope beyond economics to foreign policy.

Announcing the change, Treasury Secretary Timothy Geithner and Secretary of State Hillary Clinton said the first meeting in the new administration will take place this summer in Washington.

Former Treasury Secretary Henry Paulson began the high-level talks in 2006 during a time of growing tension over America’s soaring trade deficit with China. American manufacturers charged that China was manipulating its currency value to gain trade advantages.

Paulson sought to use the talks to bring pressure on the Chinese to allow their currency to rise in value against the dollar, an effort that was only partially successful.

In the Bush administration, the discussions took place twice a year rotating between China and the U.S. The Obama administration has reduced the number to one and elevated the role the State Department will play in the discussions. Treasury and State now will share responsibilities for guiding the talks.

Administration officials said the changes were being made to broaden the discussions between the two nations. While the talks would only occur once a year, the administration plans to have that session take place only after extensive preparatory work by officials in both countries.

The announcement came on the same day that President Barack Obama met in London with Chinese President Hu Jintao. Obama accepted an invitation from Hu to visit China sometime in the second half of this year.

According to a fact sheet released by the White House, Clinton and Chinese State Councilor Dai Bigguo will chair the strategic track of the discussions. Geithner and Chinese Vice Premier Wang Qishan will chair the economic track.

“The dialogue will focus on addressing the challenges and opportunities that both countries face on a wide range of bilateral, regional and global areas of immediate and long-term strategic interest,” Clinton and Geithner said in their joint statement.

American manufacturers had pushed strongly for the initial strategic dialogue talks to be used to pressure the Chinese to allow their currency to rise in value against the dollar. Domestic manufacturers contend China is artificially depressing the value of its currency to gain competitive advantages in trade with the U.S. by making Chinese products cheaper in America and American goods more expensive in China.

Frank Vargo, vice president for international affairs at the National Association of Manufacturers, said the trade group favored the administration’s new approach, believing that currency issues and broader trade matters will remain a top priority.

“This is good news because the relationship between China and the United States in this very troubled economic period is extremely important,” Vargo said. “We will have a very high level dialogue which is important to get the top levels of the Chinese government to focus on these issues and not have them disappear in the Chinese bureaucracy.”



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