Top finance officials from the United States and China pledged greater cooperation Tuesday on a range of economic issues from dealing with soaring energy prices to coping with the global shocks from America’s subprime mortgage crisis.
However, it was clear that the fourth round of high-level economic talks would leave both nations far apart on a number of contentious subjects from U.S. unhappiness over the slow pace of China’s economic reforms to Chinese concerns about increasing protectionist sentiments in the United States.
Treasury Secretary Henry Paulson hoped that the two days of talks will produce enough results to persuade the next administration to continue the meetings. It was Paulson’s brainchild to start the twice-a-year discussions in 2006.
Chinese Vice Premier Wang Qishan, the head of the Chinese delegation, said he believed that real progress had been made in dealing with contentious issues such as currency and the trade deficit, and he urged patience going forward as China implements necessary reforms.
Wang said the two countries needed to avoid “complicating and politicizing economic issues.” The Chinese have grown concerned about a number of bills introduced in Congress that would impose economic sanctions on China unless the country moves more quickly to allow its currency to rise in value against the dollar.
“Our cooperation is an irreversible and unstoppable current,” Wang said, speaking through an interpreter. “China needs the United States and the United States needs China.”
In addition to a broad sampling of President Bush’s Cabinet and their counterparts from China, the talks also included Federal Reserve Chairman Ben Bernanke and the head of China’s central bank, Zhou Xiaochuan.
Paulson said it was critical that the United States and China, the world’s two largest importers of oil, increase their cooperation on energy issues in the face of increased demand and record-high oil prices. He said the two sides would work to flesh out more details of a 10-year cooperative agreement reached in Beijing in December.
The talks, known as the Strategic Economic Dialogue, have so far failed to live up to expectations that they could trigger broadbased economic changes that would lead to a significant narrowing of the U.S. trade deficit with China, which last year hit an all-time high of $256.2 billion, the largest deficit ever recorded with a single country.
While the Chinese have allowed their currency to rise in value by 20 percent against the dollar since July 2005, American manufacturers contend that the yuan is still significantly undervalued, putting U.S. products at a competitive disadvantage.
Paulson said that the talks were important to the global economy even when they produced only incremental changes.
“The United States and China don’t always agree on economic issues,” he said. “Sometimes we may disagree quite strongly, but we keep talking.”
Business groups, which believe the meetings have been beneficial, said it would be wise for the Chinese to produce results as a way of convincing the next occupant of the White House to keep the talks going.
But other China experts say the Chinese delegation may believe that it is not worthwhile to offer too many economic concessions to a lame-duck administration when they can wait to negotiate with a new team.
The administration wants the Chinese to open their financial system to foreign banks and investment houses, but that effort is meeting strong resistance from the Chinese, given the billions of dollars in losses suffered by U.S. financial giants in the credit crisis that erupted last August.
Wang, who headed one of China’s biggest government-owned banks, said that he wanted to use the talks to “deepen our discussion about the U.S. subprime crisis and its implications.”
Zhou, China’s central bank governor, said that the Chinese were interested in learning what regulatory mistakes had led to financial troubles in the U.S. and that Bernanke had led a discussion on the issue.
Alan Holmer, the administration’s China envoy, told reporters at a separate briefing that “there would be significant costs to China if they were to slow down in their financial-sector liberalization.”