Paulson seeks progress in China talks

Paulson seeks progress in China talks

	Published : Wed, 02 May 2007 21:05 By : Agencies Print this Story

WASHINGTON (AP) - Treasury Secretary Henry Paulson played down expectations for any big breakthroughs in upcoming economic talks with China but said he was looking for 'signposts' of short-term progress.

He hopes private discussions that visiting Chinese officials plan with members of Congress this month will help both sides understand each other better.

At a forum sponsored by a Washington think tank, Paulson on Wednesday repeated his view that China needs to move more quickly to allow its currency to rise in value against the dollar.

He said it was an 'unnatural act' for China to be so fully integrated in the global economy in terms of trade without having a currency that is set by market forces.

The secretary did not make any predictions that China was on the verge of accelerating its pace of currency reform, which U.S. manufacturers see as critical for trimming the huge U.S. trade deficit with China.

The United States and China held the first 'Strategic Economic Dialogue' in December in Beijing; the second round of talks is set for Washington on May 23-24. Paulson will head the U.S. team; China will be led by Vice Premier Wu Yi.

'We are focused on long-term goals while simultaneously looking for short-term results,' Paulson said.

He said he would look for short-term achievements as 'signposts along the way' that the new high-level talks are working.

China has already achieved a benefit, Paulson said, with the U.S. now favoring China's membership in the Washington-based Inter-American Development Bank, which supports development projects in Latin America.

He said that other areas of discussion include an agreement that would increase commercial airline flights between the U.S. and China, and efforts to improvement environmental protections in China through such projects as developing cleaner-burning coal-fired electric generating plants.

The Bush administration is hoping the dialogue will defuse efforts in Congress to impose protectionist penalties on Chinese products in retaliation for what lawmakers see as unfair Chinese trade practices such as currency manipulation.

In an effort to demonstrate that current U.S. laws can deal with China, the administration in recent weeks has filed two trade cases against China with the World Trade Organization and for the first time imposed penalty tariffs on Chinese paper products in a dispute over government subsidies.

Paulson said the Chinese delegation will have a chance to meet privately with members of Congress.

'Wu Yi is a very persuasive woman. She is a force of nature,' Paulson said. Her discussions with Congress, he said, 'could make a real difference' in increasing the understanding of officials in both countries.

The Chinese delegation is also expected to meet with President Bush.

Paulson said that in his own private talks with lawmakers, he finds they are open-minded about the chance for progress through negotiations rather than resorting legislation that would penalize China.

Paulson said it was important for the Chinese to understand that 'time is of the essence' in putting in place changes such as a more flexible currency. 'The longer they wait, there will be more resistance to change,' Paulson said.

One bill that has gained wide support in Congress would make currency rate manipulation by any U.S. trading partner an export subsidy subject to U.S. trade penalties.

Paulson refused to say whether the administration could support any of the bills aimed at China. He said 'clearly there is not just the possibility of legislation but the likelihood of legislation.'