The U.S. Treasury secretary, urged Beijing during bilateral talks on Thursday to let its tightly controlled currency strengthen and to open its markets further.
Chinese officials responded Thursday by denying that the renminbi was undervalued and pressing Washington to ease controls on exports of high-technology goods to China.
Beijing has allowed the renminbi to strengthen gradually, but Washington and other major trading partners say that the currency is still too weak and that that gives Chinese exporters an unfair advantage over foreign competitors. Some U.S. lawmakers have called for punitive tariffs on Chinese goods if Beijing fails to act quickly on its currency.
The beginning of the talks in Beijing this week, known as the Strategic and Economic Dialogue, was largely overshadowed by a diplomatic tussle over the fate of a blind Chinese lawyer and activist, who had been in the protective custody of the U.S. Embassy in Beijing until his release Wednesday.
The annual bilateral talks are designed to ward off trade clashes between the United States and China, the world’s two largest economies, and to promote cooperation on a wide array of environmental, financial and other issues.
Washington views the promise of a stronger renminbi in China’s latest five-year economic development plan as particularly important.
In more pointed language last week, it was said that an undervalued renminbi was a source of unfair competition, and the times call for a stronger, more market-determined exchange rate and that would help the global economy.
The Chinese trade minister, denied Thursday that the renminbi was undervalued and drew attention to China’s shrinking global trade surplus. China reported a $5.3 billion surplus in March, down from a monthly level of at least $15 billion for most of 2011. China’s global trade is basically balanced, while running a surplus with the United States. He also states that the situation shows that the exchange rate plays a minimal role in trade.
At the meeting Thursday, the Vice Premier of China stressed the importance of cooperation to support global growth. The global economic recovery remains sluggish, and the situation is grim and complicated. Coupled with higher need for Manufacturing Quality Assurance and Factory Audits in these overseas markets, the economic outlook is not looking as good as hoped.
Washington welcomed a decision by Beijing in April to widen the daily trading band within which the renminbi is allowed to fluctuate, to 1 percent from 0.5 percent. It does not think, however, that the move goes far enough toward market-driven exchange rates, according to a senior U.S. official who is part of the U.S. delegation in China and who spoke on condition of anonymity.
U.S. officials pressed China on Thursday to lower import barriers and to create a more level playing field for foreign companies, the official said.
The U.S. trade deficit with China hit a record high of $295.5 billion last year, 8.2 percent higher than the previous record, in 2010.
The U.S. Commerce Department announced last month that it would impose new import fees on solar panels made in China, after having concluded that manufacturers had received improper subsidies. The Chinese authorities announced their own investigation in November into whether U.S. support for renewable energy companies was hurting foreign suppliers.
The Chinese trade minister renewed demands for Washington to ease export controls on more than 2,400 high-technology products. The United States restricts sales of so-called dual-use goods that have potential military applications.
The u.S. expressed support for China’s plan to overhaul its financial system to increase support for private enterprise and reduce special treatment for state-owned companies. That reflected a recognition by Beijing that it needed more private-sector innovation and that it had to allow more competition from foreign companies.
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