U.S.-China economic talks end with limited steps on opening Chinese markets

Posted in China , United States | 24-May-07 | Author: Steven Weisman| Source: International Herald Tribune

Chinese Vice Premier Wu Yi chats with U.S. Treasury Secretary Henry Paulson at the second meeting of the U.S.- China Strategic Economic Dialogue in Washington, D.C.

WASHINGTON: Treasury Secretary Henry Paulson Jr. and a team of cabinet members concluded two days of talks with Chinese leaders Wednesday with an announcement of limited steps to open Chinese markets. But the measures appeared unlikely to impress critics of Chinese economic practices in the U.S. Congress.

Immediately after the announcement at the end of the "strategic economic dialogue" with China, the visiting delegation headed to Capitol Hill to meet with Congressional leaders to try to contain a drive that could lead to enactment of sanctions against China later this year.

Paulson counseled patience since any results of the dialogue would be long term, but he offered restrained praise of what China had done so far on one issue that has been most contentious, its intervention in currency markets to keep the value of its currency artificially low.

Noting that the value of the Chinese currency had appreciated a little more than 8 percent in two years, with an uptick in the last few days, the treasury chief called on China to "move more quickly" on currency.

"We make the case, they listen and they are moving the renminbi," Paulson said, referring to the domestic name of the currency. He said that an announcement last week that China was widening the band in which the currency could fluctuate each day was a "positive signal" but that more needed to be done over time.

Critics of China in Congress and the American business community charge that it keeps the level of its currency low in order to make exports less expensive and imports into China from the United States more costly. Many European companies voice the same complaints.

The announcements concluding the Chinese-American dialogue call for China to remove an impediment to the entry of new foreign securities firms into Chinese markets, and to allow more securities companies to engage in joint ventures in investments. The agreement will also expand the number of qualified investors allowed to enter Chinese markets.

In addition, China will purchase more energy and environmental technology from the United States and take unspecified steps to crack down on piracy of DVDs and other goods.

Passenger flights between the United States and China would more than double by 2012, according to an air services agreement reached by the two countries on Wednesday, Reuters reported from Washington.

The deal, announced by the U.S. Transportation and Treasury departments at the conclusion of a U.S.-China economic forum, would also eliminate nearly all barriers to cargo service by 2011, which would help FedEx and UPS.

"Piece by piece, we are making it easier, cheaper, and more convenient to fly people and ship goods between our two countries," Transportation Secretary Mary Peters said in a statement.

Chinese officials did not comment immediately on the agreement.

The United States will designate three additional passenger carriers to fly to China - one in 2007 and two in 2009. Currently, only United Airlines, American Airlines, Continental Airlines and Northwest Airlines offer service.

Under the new agreement, the number of daily round-trip flights will jump to 23 from the current 10 within five years. One flight will be awarded this year and next, followed by four in 2009, three in 2010 and two each in 2011 and 2012.

Peters was in China in April for talks on expanding service. The two sides will resume talks in 2010 on a timetable for full liberalization or "Open Skies" between the countries.

American and Delta Air Lines immediately welcomed the announcement, and each would be expected to bid for the additional routes.