A top-level meeting between China and the United States in May will be "very important" for defusing strains between the two big economies, Chinese Premier Wen Jiabao said in conciliatory comments on Monday. Wen made the remarks in a meeting with foreign business executives in Beijing on Monday, telling them he did not want "trade and currency wars".
A "Strategic and Economic Dialogue" of senior Washington and Beijing officials in May would be an important forum for addressing strains between the two powers, said Wen. "The dialogue in May will be very important. It's an opportunity to address the problems between China and the United States, and so we take it very seriously," Wen told the executives, according to footage of the meeting given to foreign news organisations.
Beijing and Washington have quarrelled in recent months over human rights, Chinese Internet controls, US weapons sales to Taiwan, and now rising ire from Washington over Beijing's controls on its yuan currency, which critics say is held so low that Chinese goods have an unfair edge.
Wen's comments marked a cooling of Beijing's recent tough talk - including some from himself - and appeared aimed at containing ire after many members of the US Congress urged stronger steps from President Barack Obama to press Beijing to let the yuan appreciate.
China revalued the yuan by 2.1 percent against the dollar in July 2005 and then let it climb nearly another 19 percent before calling a halt in mid-2008 to help its exporters surmount the global financial crisis. Economists say the yuan is at least 25 percent undervalued, making Chinese exports artificially cheap. A US Treasury Department report due out on April 15 could label Beijing a "currency manipulator," opening a fresh front of pressure from the Obama administration.
China has sent its Vice Commerce Minister Zhong Shan to Washington this week to try to ease the rising frictions. Wen appeared to suggest that the May meeting would be a better way of dealing with economic strains. He did not mention the US report due in April.
"Although there are conflicts and problems in bilateral economic and trade ties, I'm sure that as long as we adhere to a spirit of mutual benefit and mutual accommodation on an equal footing, we can always find solutions," said Wen. "All responsible countries and businesses in the world must firmly oppose trade and currency wars," said Wen.
China has given no indication it is ready to abandon its commitment to a stable yuan exchange rate. The US trade gap with China narrowed to $226.8 billion in 2009 from a record $268.0 billion in 2008. But with the Obama keen to expand exports, the deficit remains a point of friction with the world's third biggest economy.
No firm date has been set for the strategic dialogue, which is due to be held in Beijing. Officials attending may include US Secretary of State Hillary Clinton, US Treasury Secretary Timothy Geithner and senior Chinese officials, including Vice Premier Wang Qishan.
Wen sounded a worried note about China's banking system, which has pumped out a surge in lending. "We had planned to maintain a balanced and sustainable growth in credit last year, but the outcome we have seen does not fully reflect our original intention, especially the lending surge this January, which exposed institutional problems we have to face," Wen said.
Chinese banks made about 700 billion yuan ($102.5 billion) in new loans in February, half that of January, as the government clampdown on lending took hold, state media said earlier this month. Beijing has told banks to lend steadily throughout the year. But the banks often ramp up new lending in the early part of the year, in part to extend loans before anticipated government curbs.
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