BEIJING - China on Tuesday rejected US complaints that it is failing to live
up to market-opening commitments on the eve of a visit to Beijing by US Treasury
Secretary Henry Paulson to discuss currency and other contentious issues.
have implemented our obligations and commitments earnestly and have abided by
the rules of the World Trade Organization," Foreign Ministry spokesman Qin Gang
Qin rejected a US government report released Monday that said China has
failed to live up to WTO pledges and warned that Washington would not hesitate
to pursue sanctions.
The report came amid a flurry of news on China's soaring trade surplus and
complaints about market access that highlighted the complexity of the challenge
facing Paulson and his Chinese counterparts.
Paulson has tried to downplay expectations of major agreements from the
meetings Thursday and Friday in Beijing, billed as part of a long-term
"strategic dialogue." Chinese officials have ruled out major changes in
Beijing's currency policies, a key issue for American manufacturers, who say the
yuan is undervalued.
That came after Beijing said its November trade surplus was the
second-highest on record, lifting its global trade gap to $156.5 billion for the
first 11 months of the year, far above last year's $102 billion.
"These discussions will be poisoned by events and economic news before
Secretary Paulson and his crew get to Beijing," Carl B. Weinberg, chief
economist for the consulting firm High Frequency Economics, said in a report
The talks led by Paulson, Washington's point man on economic relations with
Beijing, and Chinese Vice Premier Wu Yi are part of a high-level dialogue
announced in September to address trade, currency and other disputes.
Paulson is accompanied by a host of top American officials, including Federal
Reserve Chairman Ben Bernanke and four other Cabinet members - Commerce
Secretary Carlos Gutierrez, Energy Secretary Samuel Bodman, Labor Secretary
Elaine Chao and Health and Human Services Secretary Mike Leavitt.
US Trade Representative Susan Schwab and the head of the Environmental
Protection Agency, Stephen Johnson, also are attending.
Schwab gave ammunition to Beijing's critics on Monday with an annual report
to Congress that said China is failing to live up to its market-opening WTO
pledges. It said Beijing should do more to fight product piracy, end policies
that favor Chinese companies and lower barriers to foreign competitors in its
"Certain industries face frustrating barriers to doing business in China and
there are worrisome signs that China's market liberalization efforts have slowed
in the last year," Schwab said in a statement.
The United States also is pressing Beijing to raise the value of its
currency, the yuan, which has gained only 3.4 percent against the US dollar
since it was revalued in July 2005.
Last week, a group of US manufacturers appealed to Paulson to press Beijing
for action on its currency. They contend that the weak yuan is a key reason
behind China's bulging trade surplus with the United States, which is on track
to surpass last year's record-high $202 billion.
But a Chinese central bank official on Monday appeared to rule out major
changes in the system that allows the yuan to fluctuate within a narrow band
against the dollar.
"Right now, the trading band still has a bit of room," said Tang Xu, director
of the bank's Research Bureau, during a financial conference in Beijing. "Since
were still far from using the entire band, there's no need to discuss whether we
need to cancel or expand the band."
Chinese leaders say they plan eventually to let the yuan trade freely on
world markets. But they say easing controls too quickly would disrupt China's
fragile banks and financial industries.
In November, China's global trade gap totaled $22.9 billion, just below the
all-time monthly high of $23.8 billion set in October, according to government
A key issue for US trade officials has been gaining wide access for American
financial and other service companies to China's market.
But a report this week by the Chinese Commerce Ministry says the country's
own service industries ran a $5.6 billion deficit in the first half of 2006,
suggesting the government is unlikely to add to the gap by allowing more foreign