Next week's Sino-US Strategic Economic Dialogue comes at a critical time
because the Bush administration is under increasing pressure from the Democratic
Party-controlled Congress to sort out its trade disputes with China, a Chinese
expert said yesterday.
"The Bush administration has been trying to ward off domestic pressure on
trade disputes with China. But it seems to have stopped doing so recently in the
face of mounting pressure from the Congress and the American people," Shi
Yinhong, director of the Center for American Studies of the Renmin University of
The heating up of the presidential campaign has added to the pressure on Bush
before the second round of the dialogue, scheduled for May 22-23 in Washington.
The world has
become so interdependent that it's natural for the two big economies to have
economic disputes, Shi said.
Rate reform 'will be gradual'
The upcoming strategic economic dialogue with the
United States can help iron out wrinkles in the relationship, but
China has no plan to change the pace of its exchange rate reform
despite pressure from Washington, government officials
Window to future relations
President Hu Jintao and US President George W. Bush
agreed in August 2006 to create a Strategic Economic Dialogue (SED)
between China and the United States.
"The point is not about trying to find a problem-free economic environment;
it is about looking for a channel to divert these disputes and clear our
"Disputes can arise at any place, but the Strategic Economic Dialogue, (along
with dozens of other talks), provides such a channel for officials and ordinary
people in the US and China to exchange views and make some compromises," he
Currency exchange rate, intellectual property rights and market access to
China are expected to be on top of the US agenda, Shi said. But it's unrealistic
to expect any breakthrough in these areas.
No breakthrough, however, doesn't mean failure or that high-level officials
should not be present at such meetings.
It can be considered fruitful if they can make some progress in those areas
because even a small progress can relieve the pressure on the Bush
administration, he said.
China understands the pressure Bush is facing, and has done a lot to help
relieve it. But there's no reason for it to be blamed for that, he said.
To go with the world's existing economic environment, China has adopted a
"managed floating exchange rate", and the yuan has already appreciated 5.4
percent since 2005.
The yuan became more flexible recently and is expected to be more
fluctuating, said Zhao Xijun, a professor in the School of Finance of Renmin
University of China.
"The increase in federal reserves and trade surpluses and flow of foreign
capital into the Chinese stock market have increased the pressure on the
government to appreciate the yuan further," Zhao said.
To solve the problem of the trade surplus, China has been working to adjust
its trade imbalance and currency rate both, he said.
The complaints and demands of our trade partners such as the US are often
based on their own political or industrial considerations, Zhao said.
Premier Wen Jiabao has made it clear China has already set the course of its
direction for the exchange rate reform, but it must be based on China's domestic
(China Daily 05/16/2007 page2)