CONTOS AMERICANOS : OS CHINESES

China Refuses to Make Commitments on Exchange Rate

By Ariana Eunjung Cha
Washington Post Foreign ServiceFriday, December 15, 2006; 5:30 AM

BEIJING, Dec. 15 -- China today declined to make any firm commitments regarding changes to its exchange rate, despite continuous pressure from U.S. officials over two days of high-level strategic economic talks.
Chinese officials did say they would look into possible reforms.

But the first U.S.-China strategic economic dialogue, which included at least six Cabinet members and their Chinese counterparts, concluded very much as it began: with a vow to continue to talk some more.

American businesses had high hopes for the talks even though Treasury Secretary Henry M. Paulson Jr. and other officials have emphasized that this is only the beginning of a long-term discussion about economic issues between the two parties.

While most countries allow market forces to determine the exchange rate for their currency, China's central bank sets the value of the renminbi. Some economists complain its value is too low, favoring Chinese businesses at the expense of others, and the U.S. has sought for several years now to convince China to revalue its currency upwards.

The meetings, which took place at the Great Hall of the People in Tianamen Square, were launched by President Bush and Chinese President Hu Jintao in the fall as a way to strengthen their economic ties.
After the conclusion of the talks, China's Minister of Finance, Jin Renqing, announced that the two countries had agreed to form working groups on service sector development, improving health care, energy and the environment. Two other groups will look at investment issues, with the possibility of pursuing the creation of a bilateral investment agreement, and on enhancing cooperation on transparency issues.

The teams will present their findings at the next meeting of the strategic economic dialogue in May 2007 in Washington.

The countries also announced that they had come to an agreement on several other issues.

China announced its intension to join FutureGen, a public-private project committed to developing the first near-zero emissions coal-fired electricity generation plant. While China has not announced its specific contribution, other member countries have given $10 million to the organization. China also agreed to allow the New York Stock Exchange and NASDAQ to open up offices in the country.

For its part, the United States will support China's bid to join the Inter-American Development Bank. As the Chinese economy has continued to expand, so has the government's ambitions. In recent years it has been seeking to forge new political and economic relationships outside of Asia. Latin America, with its wealth of mineral reserves, is an important region for China, which due to its rapid industrialization and modernization is seeking new sources of natural resources.

In addition, China and the United States on Thursday signed an agreement to facilitate financing to support U.S. exports to China. They also agreed to renew negotiations regarding bilateral air services facilitating the movement of goods and people back and forth across the Pacific.