China-US economic talks to open

Monday, July 27, 2009


The first meeting of the Obama administration's US-China Strategic and Economic Dialogue is due to get under way in Washington.
US President Barack Obama is to address the two-day meeting, to which China has sent Vice Premier Wang Qishan and State Councillor Dai Bingguo.
China is worried about the value of the US dollar.
It holds huge amounts of US debt - more than $800bn (£486bn) of US Treasury securities alone.
It fears President Obama's stimulus spending will stoke inflation in the United States, eroding the value of the dollar and making the US debt China holds worth a lot less.
Ties that bind
At these talks the US Treasury Secretary Timothy Geithner will be seeking to soothe those fears.
He has already tried to reassure the Chinese their assets will be protected.
But China is not convinced.
KEY ISSUES
Values of dollar and yuan
The US will press China to rely less on exports and more on domestic consumption
China will push for the US to make a priority of curbing inflation
Both sides will seek reassurances over accusations of trade protectionism
North Korea's nuclear programme
Climate change and clean energy
US manufacturers complain they cannot compete fairly with their Chinese competitors.
Some accuse Beijing of deliberately devaluing its currency to make its exports seem cheaper.
China is unlikely to concede any ground on this point. GDP growth might be picking up here but the country's exporters are still struggling.
China and the US are well aware they need each other.
Their economies are bound together tightly.
That does not mean they always agree when it comes to trade for example - far from it - but it does mean they accept the need to sort out problems in forums like this.
'Positive and productive'
Barack Obama and China's President Hu Jintao met on the sidelines of the G20 summit that was held in London in April.
This is the first meeting of the Strategic and Economic Dialogue group that the two leaders agreed to establish to tackle the global financial crisis and strengthen the world's financial systems.
As well as the economic talks, the meeting will address strategic subjects such as co-operation on nuclear issues concerning North Korea.
On Sunday, US Secretary of State Hillary Clinton praised China for being "positive and productive" in dealing with North Korea.
"We've been extremely gratified by their forward-leaning commitment to sanctions and the private messages that they have conveyed to the North Koreans," she told US TV network NBC.

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