Paulson warms up for Sino-US dialogue

Source: China Daily | 03-08-2007 14:42

US Treasury Secretary Henry Paulson arrived in China yesterday on a two-day visit in preparation for the Sino-US strategic economic dialogue, which is scheduled to take place in May in Washington.

Paulson will fly to Shanghai from Beijing today, and will deliver a speech at the Shanghai Futures Exchange and meet businessmen, according to the Xinhua News Agency.

This is his third visit to China in seven months in his current post.

Vice-Premier Wu Yi met Paulson yesterday and the two held closed-door talks before meeting the press at Beijing Capital International Airport.

Wu took the opportunity to give Paulson a message from President Hu Jintao to US President George W. Bush.

Hu said China highly values its strategic economic dialogue with the United States and will make efforts to ensure it succeeds to promote the two nations' relationship.

Paulson's visit has been widely interpreted as designed to press China into accelerating revaluation of the yuan.

But the treasury secretary said on Tuesday in Japan that he was hoping to discuss the opening-up of China's service industry to the world, environmental protection and overall economic reform.

Paulson's all three visits have been preceded by record rises in the value of yuan.

On Monday, the renminbi central parity rate was 7.7403 against the US dollar the highest since China's major foreign exchange reform in July 2005, when the yuan was de-pegged from the greenback. The yuan stood at 7.7436 against the US dollar yesterday.

Zhou Xiaochuan, governor of the central bank, said during the current session of the National People's Congress that China will widen the renminbi's floating range if necessary.

Speaking on condition of anonymity, a senior economist close to financial policy-making told China Daily yesterday that it is not in the US interest to press for accelerated yuan revaluation and "the Americans clearly know that".

Cheap Chinese products exported to the US benefit consumers. Moreover, China's purchase of US treasury bonds using its foreign exchange reserves pushes up the price of the bonds and helps lower interest.

The lower interest rate has provided a boost for the US economy, the economist said.

If the yuan is revalued by a large margin, those US benefits would disappear, he added.

China and the US started their biannual strategic economic dialogue last September. The first round of the dialogue was held last December in Beijing.

Editor:Du Xiaodan