updated 8/1/2007 11:17:12 AM ET 2007-08-01T15:17:12

U.S. Treasury Secretary Henry Paulson said Wednesday he was assured that China is committed to currency flexibility and more financial reforms, but Beijing offered no specific changes that could help assuage U.S. congressional ire over China’s huge trade surplus.

“I heard from everyone, right up to the top, they are committed to currency flexibility, to currency reform,” Paulson told reporters.

Officials said they plan to lift a 10-month-old moratorium on new U.S.-Chinese joint-venture securities brokerages in early autumn, instead of December as originally planned, Paulson said.

The secretary, Washington’s point man on China, is trying to avert drastic action by congressional critics who are pressing for punitive measures over Beijing’s currency controls and multibillion-dollar trade surplus with the United States.

Beijing had not been anticipated to offer concessions during Paulson’s visit. But he was expected to use the trip to try to persuade Congress that his “Strategic Economic Dialogue” is making progress.

Paulson said he discussed that process in meetings with Chinese President Hu Jintao and Vice Premier Wu Yi, Beijing’s top envoy to the dialogue. Paulson said he made the case that China would benefit from a faster appreciation of its currency, the yuan. But he gave no indication that Chinese leaders promised a faster rise or any other specific changes.

The secretary declined to give details of his talks with Hu and Wu, saying that would diminish the value of such private meetings.

But Paulson suggested the Chinese might be growing impatient with the wide range of issues raised by Washington.

“They’re too polite to say they’re frustrated,” he said, adding he believes Chinese leaders are wondering if they will ever be able to satisfy Washington.

Paulson said he shared the frustration of American lawmakers at the pace of reform and expressed confidence that they would understand that he is making progress.

However, he acknowledged: “I’ve got more work to do with Congress.”

The secretary also met with China’s central bank governor, finance minister and banking and securities regulators.

Paulson has been granted unusually wide access to top Chinese officials in a sign of the urgency Beijing places on preserving trading relations with the United States.

Finance Minister Jin Renqing agreed to hold a meeting in October of the U.S.-China Joint Economic Commission, a forum for discussing financial issues, Paulson said.

Paulson, a former Goldman Sachs chief executive, says Beijing’s currency controls are less significant than barriers to foreign competition in its financial industries and other structural factors in driving the trade surplus.

But critics have focused on the yuan, accusing China of keeping it undervalued by up to 40 percent. They say that gives Chinese exporters an unfair price advantage and widens its yawning trade gap. Last year, the U.S. trade deficit with China reached a record $235 billion.

Chinese leaders say they plan eventually to let the yuan trade freely on world markets. But they say acting too abruptly will hurt China’s frail banks and cause financial turmoil.

China revalued the yuan by 2.1 percent against the dollar in July 2005 and has allowed it to rise by about 7.2 percent since then. The rate of increase has speeded up in recent months, but analysts expect Beijing to restrain the yuan’s rise to about 5 percent annually over the next few years — far less than critics want.

The Senate is considering two bills aimed at pressuring China to overhaul its currency system.

Paulson rejected such measures, saying they would harm Washington’s efforts to encourage Beijing to reform.

“Legislation would be counterproductive and would undermine what we’re trying to do here,” Paulson said.

Paulson has pleaded with Congress for time to let the dialogue work. But China’s supercharged growth is fueling arguments that it can afford to move faster.

China’s economy expanded 11.9 percent last quarter — the fastest quarterly growth in 12 years — and the trade surplus jumped by 85 percent in June to $26.9 billion.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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