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China and US vow to address trade rancour

BEIJING: China and the United States on Tuesday pledged to resolve their lingering trade disputes and combat protectionism, as visiting US President Barack Obama called on Beijing to let the yuan rise.

Comments by Obama and Chinese President Hu Jintao to reporters after their summit however gave no further specifics on how the two economic giants planned to defuse mounting trade rancour marked by a series of tit-for-tat actions.

The two sides said in a joint statement that they “recognise the importance of open trade and investment to their domestic economies and to the global economy, and are committed to jointly fight protectionism”. Hu said they would “continue to have consultations on an equal footing to properly resolve economic and trade frictions in a joint effort to uphold the sound and steady growth of their business ties and trade.”

In his comments, Obama raised the two countries’ central trade dispute — accusations that China keeps its currency undervalued to boost exports at the expense of those of other countries — but tread softly. “I was pleased to note the Chinese commitment, made in past statements, to move toward a more market-oriented exchange rate over time,” Obama said as Hu looked on.

“I emphasised in our discussions, as have others in the region, that doing so based on economic fundamentals would make an essential contribution to the global (economic) rebalancing effort.”

China has come under increasing pressure to loosen its grip on the yuan, with Asia-Pacific finance ministers last week complaining about it at a regional summit in Singapore.

International Monetary Fund chief Dominique Strauss-Kahn, during a visit to Beijing on Tuesday, urged China to let the yuan rise ‘sooner rather than later’, saying it would benefit both the Chinese and global economies. On the yuan, Hu noted merely that “the two sides reiterated that they will continue to increase dialogue and cooperation in macroeconomic and financial policies.” The world’s number-one and number-three economies have swapped a series of accusations of dumping and other unfair trade practices since September, when the Obama administration announced it would slap duties on Chinese-made tyres. Chinese Commerce Minister Chen Deming raised the temperature on Friday at the Asia-Pacific summit in Singapore, lashing out at what he called an ‘unprecedented’ number of trade measures aimed at China this year.

“These measures have bad and profound implications for free international trade,” Chen told reporters, while not specifically naming the United States.

In what appeared to be a reference to such disputes, Hu said, “I stressed to President Obama that under the current circumstances, our two countries need to more strongly oppose and reject protectionism in all its manifestations.” Obama praised China for its four-trillion-yuan ($585 billion) economic stimulus plan, which he said had helped the global recovery effort. “So far China’s partnership has proved critical in our effort to pull ourselves out of the worst recession in generations,” he said. But he repeated a call he made in Singapore for a rebalancing of the global economic order under which the United States would not be relied upon to bear the overwhelming burden of global consumption.

The US government, which runs a massive trade deficit with China, has pressured Beijing to spur domestic consumption in its fast-growing economy as a way of addressing this imbalance.

Hu did not address such demands in his remarks, but a joint statement said: “China will continue to implement policies to adjust economic structure, raise household incomes, and expand domestic demand to increase the contribution of consumption to GDP growth.” afp

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