China and the US opened high-profile trade talks speaking against protectionism but both remained sharply divided as before on thorny issues
like trade barriers and appreciation of the Chinese currency.
At the top-level third Strategic Economic Dialogue, China held on to its well entrenched position that it cannot let its currency - Yuan - appreciate rapidly and Beijing cannot be blamed for trade imbalances, two key issues that top
the US agenda.
In the talks held at Xianghe on the outskirts of
Beijing, Chinese Vice-Premier Wu Yi pointed to 50-odd "protectionist" China-related bills in the US Congress, warning that any attempts to legislative them would undermine the bilateral trade ties.
China's "Iron Lady" known for her tenacious trade
negotiations skills, cautioned against finger-pointing and confrontation in remarks seen as an ostensible counter to the US' accusations of trade barriers and unfair trade practices
by China.
The US Treasury Secretary Henry Paulson also spoke against trade protectionism, saying it would serve the interests of neither and cautioned against "short-term politically expedient actions".
But, his advice to China to adopt a more flexible
exchange rate and let Yuan appreciate more rapidly drew a cold response from Beijing.
Paulson sought to convince China that Yuan
appreciation was in its own interest given the risks to its macro-stability such as overheating of the economy and the inflation.
On the sidelines of the talks, Chinese Vice-Commerce Minister Chen Deming spoke bluntly and said allowing the Chinese currency to appreciate rapidly would cause fluctuations in its economy that was not positive to the world.
China was not against the appreciation of the Yuan but did not want it to happen "too rapidly" as it would not suit "China's conditions", Chen said. "Some people in the world hope the Renminbi (Yuan) would appreciate as fast as possible,
these are irresponsible remarks".
China also sought to turn the tables on the US, with Chen saying Beijing was concerned over the continued depreciation of the US dollar.
He argued that depreciating USD would drive up oil and gold prices and reduce the assets of the countries or companies that hold the currency. "So, I hope the US economy could be stronger as well as the US dollar".
He also forcefully argued that appreciation of Yuan would not help ease the trade imbalance between China and the US. The Yuan rose 11 per cent since China de-regulated it from
the USD in July 2005 but the trade surplus had not shrunk, he said, according to Xinhua.
The latest figures from Chinese Customs show that from January to November, China-US trade expanded 15.7 percent over the same period last year, to USD 276.21 billion, he said.
"Chinese are going to do what they believe is in their best interests," Paulson told reporters. "This (currency) issue will be with us for some time," he said, indicating the gulf prevailed.