China urges US to lift export controls

China-US trade balance © AFP/Graphi

AFP

WASHINGTON (AFP) –   China urged Washington to lift export and investment controls directed against Beijing, saying such a move could go a long way towards conquering the steep trade imbalance between the two powers.

But in their annual bilateral dialogue, US officials continued to press Beijing over its allegedly undervalued yuan as a way to redress China’s $273 billion trade surplus with the United States.

“The way to resolve this imbalance is to ease the export control regime of the United States towards China and to encourage US exports to China rather than restricting Chinese exports to the United States,” Chen Deming, the Chinese trade minister, told reporters.

Chen said Washington’s forex argument over the trade issue between the world’s two largest economies “is not founded.”

Over the past three years, he said, China’s overall trade surplus has continued to decline and fell to about $180 billion, or 3.1 percent of gross domestic product.

By international standards, that is “a very healthy share,” he said.

“We have a balanced trade with all other countries except the United States,” he added.

Earlier US Treasury Secretary Timothy Geithner opened the two-day US-China Strategic and Economic Dialogue by placing China’s need for a more flexible exchange rate and more open capital markets top of a list of things to discuss.

Chinese officials said later the yuan was not discussed on Monday. A senior US official said Geithner would raise the issues of currency and economic rebalancing in greater depth on Tuesday.

In his opening remarks, Geithner also listed China’s need for banking reforms to boost its private sector, and the need for “a more level playing field” in trade and investment between the two economic superpowers.

Chinese Vice Premier Wang Qishan called addressing economic imbalances “a long process.”

“It’s not something we can do overnight,” he said, speaking through an interpreter. But he noted the country had made progress since last year’s talks.

“China has made headway in combating intellectual property infringement, promoting the use of legal software, and improving policies regarding indigenous innovation and government procurement,” Wang continued.

He pressed Washington to “take credible steps to relax high-tech export controls vis-a-vis China, recognize China’s market economy status, accord fair treatment to Chinese companies investing in the United States and refrain from politicizing economic and trade issues.”

In the same way that Washington asks Beijing for a schedule on how it will address US complaints, Wang said, China is seeking a timetable on when the US export controls and other issues would be resolved.

Chinese firms seeking to buy sensitive US technologies or invest in US tech firms — especially those with security- or military-applicable technologies — must get approval, and denials and delays have angered Beijing.

In the past three years, for example, Chinese mobile network equipment giant Huawei has been stymied in two attempts to buy US technology companies, and was also blocked on national security reasons from selling equipment to top US mobile phone provider Sprint Nextel.

Both sides emphasized the progress they had made on economic relations, and stressed that cooperation will remain crucial for the global recovery from the 2008-2009 economic downturn.

But Geithner called on China to adopt a “new growth model, driven by more domestic demand, with a more market-based economy and a more sophisticated financial system.”

Separately, Geithner also highlighted the need for China to strengthen intellectual property rights and to be more welcoming to foreign investors.

Wang suggested the United States needs to do more on its own to strengthen the world economy. “The key to global economic recovery still lies with the United States,” he said.

The talks come as the world’s two biggest economies grow increasingly intertwined. China is the biggest foreign financier of the yawning US public debt, with US bond holdings of $1.154 trillion in February.

Asked whether China was concerned about ratings agency Standard & Poor’s outlook downgrade on US sovereign debt, Zhou Xiaochuan, governor of the People’s Bank of China, said only that the Chinese central bank and other major financial authorities “must rely more on the internal assessment that we make and should not just rely on the credit ratings provided by big… firms.”

© AFP — Published at Activist Post with license