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WASHINGTON : China assured the United States at the end of high-level talks Wednesday that it would allow greater flexibility of its yuan currency but American lawmakers who have threatened sanctions on Beijing were unimpressed.
US Treasury Secretary Henry Paulson said after the "strategic economic dialogue" in Washington that the 15-minister strong Chinese delegation to the talks "clearly see the need and stated the principle of greater renminbi flexibility."
Renminbi is the alternative name for the Chinese currency, which could also hog the agenda when Chinese Vice Premier Wu Yi leads her cabinet ministers to the White House for talks with US President George W. Bush on Thursday.
The Bush administration is under pressure from US lawmakers threatening to push ahead with legislation imposing punitive tariffs on Beijing if the Chinese refuse to allow an appreciation of the yuan.
They accuse China of keeping its currency grossly undervalued to make its exports to the United States cheaper -- a key factor cited for the snowballing US trade deficit with the Asian giant that hit 232 billion dollars last year.
The two-day US-China dialogue also produced significant agreements to reduce trade barriers in financial services and the energy, environment and civil aviation sectors.
One key agreement would see China removing a barrier on the entry of new foreign securities firms and resuming licensing securities companies, including joint ventures, in the second half of 2007.
Paulson, the former Goldman Sachs chief executive, who is Bush's pointman on China, said he had pressed Beijing at the talks for greater yuan flexibility.
"They agree with us on principle. The question is the pace of change. The pace of change has picked up, but I believe it will be very much in their best interest and the rest of the world's best interest if they will move more quickly," he told reporters.
Citing China's recent widening of the trading band on the yuan, Paulson said "the real test will be how much flexibility it is on a daily basis and over time."
In an apparent bid to reinforce China's assurance on currency reform, Wu said the meeting tackled "short-term hotspot issues" with "specific deliverables" realized.
The Chinese vice premier, known as the "iron lady" of China for her strong negotiating skills, said bilateral issues should be resolved through negotiations rather than "threats or sanctions" -- a veiled message to the US Congress, where demands for action on China over the yuan is gaining currency.
Despite the Chinese assurance on greater yuan flexibility, Max Baucus, who heads the powerful Senate Finance Committee, said he saw no "real" progress.
"Dialogue between our two great nations is essential, but so are real results that improve the health of our economic relationship," said the Democratic senator.
Another Democratic senator, Charles Schumer, who heads the chamber's economic panel, noted the "glaring omission" of the need for yuan appreciation in the US Treasury's communique issued at the end of talks.
"For years, we have heard vague assurances of greater market access for American financial institutions but they rarely seem to become reality from China," he said.
Wu also met with US House of Representatives Speaker Nancy Pelosi, who raised the currency issue as well as Beijing's alleged intellectual property rights violations, its apparent silence on the genocide in Darfur in Sudan and reported human rights abuses in China and Tibet.
Paulson had intentionally scheduled the economic dialogue at a time when Congress was in session for the Chinese to have an opportunity to meet directly with lawmakers and hear their concerns.
"The clock is ticking in Congress, and without some real progress, the likelihood of legislation that could be damaging is greatly increased," warned John Engler, president of the US National Association of Manufacturers.
But the US Chamber of Commerce, the biggest business lobby, described the US-China economic dialogue's achievements as "tangible."
"The best antidote to increasing scrutiny of the trading relationship in Congress is to achieve concrete results through high-level dialogue," he said.
China also agreed at the talks to allow foreign securities firms to expand their operations in China to include brokerage, proprietary trading and fund management, Paulson said.
In addition, it agreed to raise the quota for qualified foreign institutional investors from 20 billion dollars to 30 billion dollars and to immediately allow foreign-invested banks to offer their own brand of yuan-denominated credit and debit cards.
A separate US-China civil aviation agreement will more than double passenger flights between the two countries by 2012 and greatly expand air cargo flights.
The new agreement will allow for 13 new daily flights operated by US carriers to and from China within five years.
- AFP
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