US-China trade talks focus on yuan

Currency dispute expected to dominate bilateral trade talks opening in Washington.

    A warm welcome for Wu Yi, right, but tough talks are expected in the day ahead [Reuters]

    In addition the US has accused China of dragging its feet in tackling product piracy, and has launched a case at the World Trade Organisation over the issue.
    The rows have escalated trade tensions between the two economic giants and raised fears of a possible trade war.
    The three-day talks beginning in Washington on Tuesday mark the second session of the Strategic Economic Dialogue which began in Beijing last December.

    "Attempts to politicise trade issues should be resisted"

    Wu Yi,
    Chinese vice premier

    The US delegation includes Henry Paulson, the US treasury secretary as well as Ben Bernanke, the chairman of the federal reserve.
    Wu has brought with her 16 minister-level officials, seen as a sign of the importance Beijing attaches to the talks.
    Wu's arrival comes amid warnings from both Republican and Democratic members of the US congress that they will push ahead with legislation imposing sanctions on Chinese goods if Beijing refuses to budge on key issues.

    US politicians want China to do more
    to fight piracy [Reuters]

    In a letter from US senators sent to Wu on Friday China was urged to make "meaningful commitments", particularly in allowing the yuan to appreciate.
    "Failure to adequately resolve these short term issues will not only keep our long term objectives out of reach, but also threatens to undermine the relationship between our two countries," the senators warned.
    They also cited lax Chinese enforcement of intellectual property rights, restrictions on US agricultural products and other trade barriers as examples of China's broken promises.
    But Wu, known to be a tough negotiator, is unlikely to give in to the US demands.
    "Attempts to politicise trade issues should be resisted," she said before her trip, accusing some US groups of exaggerating the trade deficit amd advocating "trade protectionism".
    Chinese leaders have said they plan eventually to let the yuan trade freely on world markets; but they say that doing so immediately would cause financial turmoil and damage the Chinese economy.
    On Monday, Beijing widened the yuan trading band to display Chinese flexibility in an apparent bid to placate US concerns ahead of the talks.

    SOURCE: Agencies


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