Beijing, despite strained ties with Washington in the diplomatic arena, showed willingness to meet a U.S. request to let its currency appreciate against the dollar so as to encourage domestic demand.
The gesture at the two-day U.S.-China Strategic and Economic Dialogue in Beijing underscored the strong ties that bind the two economic powerhouses, according to observers.
U.S. Treasury Secretary Timothy Geithner told reporters May 4 after the talks wound up that both nations can overcome their differences by strengthening bilateral relations. He said this would also help them address other challenges.
The United States had repeatedly accused China of keeping the renminbi artificially low against the dollar as a means to spur its exports.
A weak renminbi, Washington complained, gave China an unfair edge with which to inundate the U.S. market with cheap Chinese products, dealing a blow to domestic industries and U.S. employment.
But Geithner did not make further demands over the renminbi in the closing ceremony of this round of talks, merely saying that China is moving toward a more flexible exchange rate system.
His remarks showed that Washington appreciated China’s decision to loosen control of the renminbi against the dollar in response to the U.S. request.
On April 14, Beijing announced that the Chinese central bank will widen the renminbi’s trading band against the dollar.
The world’s two largest economies have apparently remained in close contact on the prickly issue of the Chinese currency.
One example is that the U.S. Treasury Department announced April 13 that it will delay submission of its biannual report on the international economic and exchange rate policy to the U.S. Congress. The step has allowed the two nations to avert a showdown.
Another pressing economic issue is the trade imbalance between the United States and China.
In 2011, the value of imports from China stood at about $400 billion (32 trillion yen), making it the largest exporter to the United States, according to U.S. government figures.
But U.S. exports to China came to only about $100 billion, the third largest among nations.
The U.S. trade deficit with China--the difference between exports and imports--runs to about $300 billion, larger than with any other U.S. trade partners.
Washington has urged China to cut its trade surplus with the United States and encourage domestic demand.
In response, Beijing on April 30 announced the reduction of tariffs on some exports, a measure intended to spur domestic consumption.
During the bilateral talks, China also promised to implement taxation reform and take other steps to help U.S. exporters.
President Barack Obama, facing re-election in November, is poised to generate more jobs in the United States by trying to double U.S. exports to China.
He is also set to accept more investment from Chinese companies in the United States.
Obama’s position is in sharp contrast with Republican presidential candidate Mitt Romney, who has taken a hard-line stance against China.
Despite disagreements on human rights and diplomatic issues, Chinese President Hu Jintao called repeatedly for building a “new type of relationship between powers” during the opening ceremony of the bilateral talks on May 3.
Hu noted that historically world powers have often been pitted against one another. In this age of globalization, he said China and the United States should explore ways to form a new relationship.
This suggests that Hu believes the two nations should try to optimize their mutual interests while putting aside their differences.
Without U.S. cooperation, China would likely have a hard time bolstering its economy.
U.S. investment, exemplified by the fact that many of computer giant Apple Inc.'s products are assembled in China, will be essential to China’s future growth.
China's behavior in recent years shows that it is ever-ready to take advantage of the United States to achieve its economic objectives.
Apart from Geithner, U.S. Secretary of State Hillary Clinton attended the talks with Chinese Vice Premier Wang Qishan and State Councilor Dai Bingguo.
(This article was written by Ikki Yamakawa and Keiko Yoshioka in Beijing.)
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