updated 10/17/2005 7:38:11 AM ET 2005-10-17T11:38:11

Treasury Secretary John Snow and other top American economic officials on Monday urged China to move faster in market-opening and currency reforms, laying out guidelines they said would make the country wealthier and more stable, while also reducing its huge trade surplus.

At annual China-U.S. economic talks due to end Monday, the American side broadened its calls for reform beyond the currency issue to a wider set of demands _ a strategy allowing the Bush administration to point to progress in other areas while avoiding confrontation with Beijing in an area where it says it cannot move any quicker.

"To say we have a roadmap would be too grandiose a characterization," Snow said. But he added, "We do have a long list of things that are being worked on that we're suggesting need to be dealt with."

There was no immediate reaction from the Chinese side on the U.S. proposals. But Snow and others said they were encouraged by the descriptions by Beijing's central bank governor, finance minister and other leaders of moves to make currency policy more flexible, privatize state-owned companies and improve scandal-laden, developing financial markets.

China's ruling Communist Party recently signed off on a five-year plan focused on pushing ahead with financial reforms while also seeking to reduce the huge divide between the city dwellers who have benefited most from the country's economic boom and the hundreds of millions of farmers who lag far behind.

Snow applauded those objectives but urged the leadership to do more to build up social welfare services and financial institutions that would offer broader, safer investment options, giving Chinese alternatives to stashing money in bank accounts while also encouraging more consumer spending.

"As China moves toward a more consumer-based society, the savings rate will go down and consumers will spend more, allowing China to buy more from the United States," he said.

"Underscoring everything we're doing is a recognition that everything we're doing is a positive sum game," Snow told reporters. "China's success helps the global economy; our success helps the global economy."

Still, Snow said he needed to see more progress toward loosening controls on the yuan to head off complaints back in Washington.

"We will continue to look hard and evaluate if real progress is being made," he said.

Federal Reserve Chairman Alan Greenspan also participated in the talks, but was not present at a midday news conference and did not make any remarks to the press.

Chinese officials have said that, for the sake of stability, they will let the yuan's value adjust gradually following a 2.1 percent revaluation in July, when Beijing gave up a decade-old peg to the U.S. dollar and began linking the yuan to a basket of currencies that also includes the yen and the euro.

Some American manufacturers contend the yuan is undervalued by as much as 40 percent, making Chinese goods cheaper overseas and contributing to China's trade surplus with the U.S., which hit a record $162 billion last year.

Congress has reacted to the gap with calls for more forceful action, with some lawmakers backing legislation that would impose 27.5 percent tariffs on all Chinese imports unless Beijing takes more steps to allow its currency to rise in value against the dollar.

Sen. Charles Schumer, a leading backer of the legislation, said if China does not begin letting the yuan rise in value, he and co-sponsors will demand a vote before Congress adjourns in November.

Such tariffs would be "ill-conceived," said Snow.

"I'm hoping that we can continue to point to progress that China is making in reforming its financial markets and moving on its currency," he said.

In other areas, officials said the U.S. side was urging China to let established foreign banks, insurance and securities firms to set up multiple branches on the same terms that domestic firms do; to remove the $10 billion minimum assets requirement that restricts the ability of foreign institutional investors to buy domestic securities, to end foreign ownership caps on financial institutions and allow 100 percent foreign ownership of subsidiaries.

The meeting of the U.S.-China Joint Economic Commission is the 17th since the forum was founded in 1979 to thrash out economic issues.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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