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China gets tough with US

Seeks end to limits on tech exports

US Secretary of State Hillary Rodham Clinton and Treasury Secretary Timothy F. Geithner listened as President Hu Jintao said China will overhaul its currency at its own pace. US Secretary of State Hillary Rodham Clinton and Treasury Secretary Timothy F. Geithner listened as President Hu Jintao said China will overhaul its currency at its own pace. (Nelson Ching/ Bloomberg News)
By Joe McDonald
Associated Press / May 25, 2010

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BEIJING — China showed its growing assertiveness yesterday as it launched high-level talks with Washington, saying it will carry out a currency overhaul at its own pace and calling for an end to US curbs on high-tech exports.

Beijing also pressured Washington to simplify foreign investment rules that it says are hampering Chinese companies and defended a policy to promote domestic technology that its trading partners say might hurt foreign companies.

At an opening ceremony for the strategic talks, President Hu Jintao promised changes in exchange rate controls that Washington and others say keep China’s yuan undervalued and distort trade. But he gave no indication when it might happen.

“China will continue to steadily advance the reform of the formation of the renminbi exchange rate mechanism under the principle of independent decision-making, controllability, and gradual progress,’’ Hu said at the Great Hall of the People. US Secretary of State Hillary Rodham Clinton and Treasury Secretary Timothy F. Geithner sat onstage.

US and Chinese officials stressed their wide-ranging common interests and pledged closer cooperation on trade, financial regulation, climate, and piracy. They called for more student exchanges and other efforts to promote people to people ties.

The gathering brings together dozens of Cabinet officials from both sides, the chiefs of both central banks, and military officers. It is the second round of strategic talks, termed the Strategic and Economic Dialogue, that began last year in Washington.

“Our common challenge is to make sure that as the global economy recovers from the crisis, we are laying the foundation for strong, sustainable, and balanced growth,’’ Geithner said at a meeting on economics.

Yesterday’s meetings focused on economic strategies and included discussion of the European debt crisis, officials said.

The talks were overshadowed by South Korea’s announcement that it was cutting off trade with North Korea and would take its neighbor to the UN Security Council over a torpedo attack that killed 46 sailors.

In currency, Beijing faces demands by some American lawmakers for trade sanctions if it fails to act. President Obama vowed in February to get tough on currency but has been more conciliatory lately, possibly hoping Chinese leaders will act if they do not appear to be giving in to pressure.

The yuan has been frozen against the dollar since late 2008 to help China’s exporters compete abroad. Analysts expected Beijing to let the currency rise this year to ease strains in its fast-growing economy but say that might have been postponed due to the European debt crisis. Because the yuan is pegged to the dollar, the Chinese currency is also gaining against the euro.

A move by China to let the yuan rise further amid that situation could have an even more harmful effect on the country’s exporters.

Beijing used the meeting to press its interests in a range of issues from technology to Taiwan.