US seeks economic balance with China

Monetary policy and Chinese human rights concerns on the agenda at economic superpower summit in Washington.

The talks in Washington covered a range of economic and diplomatic issues [AFP]

The US president has urged Chinese leaders to implement policies to help create a more balanced economic relationship between Washington and Beijing.

Barack Obama also raised concerns about the human rights situation in China in talks with Wang Qishan, the Chinese vice-premier, and the state councillor, Dai Bingguo, at the White House in Washington on Monday.

Obama and the Chinese leaders discussed ways of working together to prevent Iran from developing nuclear weapons and to persuade North Korea to abandon its nuclear weapons programmes, the White House said in a statement.

The White House talks followed a day of meetings between senior US and Chinese officials themed “Strategic and Economic Dialogue”, aimed at letting the two nations manage, if not resolve, their often tense policy differences.

Both sides pledged to use the talks to that end and Joe Biden, the US vice-president, joined Obama to voice concerns about a crackdown on dissidents in China.

“We have vigorous disagreement in the area of human rights,” he said as the talks began.

China hits back

The Chinese swiftly reacted to the charges, with the vice-premier describing US views of his country as “simple” and ruling out a Middle East-style democracy uprising in his country.

In a rare foreign television interview in Washington, Wang said US media coverage of China was simplistic and biased.

“It is not easy to really know China because China is an ancient civilisation and we are of the Oriental culture,” Wang told The Charlie Rose Show on public television, according to a transcript.

“The United States is the world’s number one superpower, and the American people, they’re very simple people,” he said.

“If they’re asked to choose to understand a foreign country, their first choice would be the European countries, and the South American countries may come second.”

Wang said that while the global economy was slowly recovering, the situation was “complicated and fraught with uncertainties”.

He said Japan’s earthquake, excess liquidity in global money markets and the Middle East unrest had all seriously damaged market confidence.

Economic imbalances

Wang, co-chair of the economic talks with Timothy Geithner, the US treasury secretary, said it would take time to correct global economic imbalances – such as China’s bulging trade surpluses and corresponding deficits in the US – and implied that Washington had more to do than Beijing.
“The key to a global economic recovery still lies with the United States,” Wang said. “We are pleased to note that the US economy is gradually improving and the Chinese economy as a whole is in good shape.” 

Patrick Chovanec, an associate professor at China’s Tsinghua University, told Al Jazeera that tensions appeared to be “easing partly because Congress in the US is focused on other domestic issues – the budget and that will preoccupy them probably throughout the year”.

“From the US point of view, China is moving a little bit more closely towards the US position. You do have appreciation in the renminbi [yuan] and you also have inflation in China: rising wages; rising cost which, in effect, has the same effect on trade as appreciation of the renminbi. Both of these things are pushing … in the direction that the US wants to see China go,” he said.

China, the United States’ biggest creditor, is concerned that its vast holdings of dollar-based assets could suffer as the US currency declines.

But it stopped short of openly criticising loose US monetary and budgetary policies which it had previously argued were weakening the dollar.

Inflation ‘pressing problem’
“We’ve already become accustomed to fluctuations between exchange rates,” China’s central bank governor, Zhou Xiaochuan, told reporters.

“At the same time, we’ve noted that the US treasury department has repeatedly stressed the view that a strong dollar is in the interests of the United States and the world.”

China pushed back on US claims that the yuan was undervalued and gave Chinese exports an unfair trade advantage.

Chen Deming, the Chinese commerce minister, said trade statistics proved his point.

“From the perspective of trade, the West’s fears and worries about China’s renminbi are unfounded because over the past three years China’s trade surplus has continuously dropped,” Chen told reporters.

However, asked in a public television interview whether a stronger yuan was needed to combat inflation, Wang called inflation “the most pressing problem” China was facing and said multiple levers were needed to to address it.
“In order to do this we have to use monetary policy, fiscal policy and, at the same time, economic restructuring,” he said on the Charlie Rose programme.
The yuan has risen about five per cent since being freed from a peg to the US dollar last June, an amount US producers consider far too little.

Source: Al Jazeera, News Agencies

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