The United States and China promised Friday to jointly tackle the global financial crisis and pledged $20 billion to finance trade as they wrapped up high-level talks marked by a pointed Chinese appeal to Washington to stabilize its economy.
China's Vice-Premier Wang Qishan (R) shakes hands with US Treasury Secretary Henry Paulson after the 5th US-China Strategic Economic Dialogue in Beijing December 5, 2008. [Agencies]
"We are both committed to strengthening the global economy," Treasury Secretary Henry Paulson, the US envoy to the Strategic Economic Dialogue, told reporters, standing with his Chinese counterpart, Vice Premier Wang Qishan.
The two countries' export-import banks will provide the credit to importers in developing economies to buy US and Chinese goods, Paulson said. He said that would help economies where traders have seen credit dry up as global turmoil spread.
"The most pressing task at hand is to quickly take effective measures to contain and curb the spread of the financial contagion and avoid a global recession," Wang said.
Also Friday, China promised to ease restrictions on foreign banks by allowing their local subsidiaries to trade bonds on the same terms as Chinese institutions. Washington agreed to speed up approval of licenses for Chinese banks to operate in the United States. The two sides promised to cooperate more closely in regulating financial risks.
US officials said Beijing promised to continue reforms that have let its yuan rise against the dollar. Washington and other trading partners say the yuan is kept undervalued, giving China's exporters an unfair price advantage and adding to its trade surplus.
Paulson declined to say whether the dialogue might continue after President-elect Barack Obama takes office in January. But he said both sides regarded it as a great success.
The chairman of the US Senate Finance Committee, Max Baucus, appealed in a statement for Obama to continue the dialogue process.
"At this time of unpredictability in our world, high-level engagement with China must be a constant," said Baucus, a Democrat from Montana.
US and Chinese officials also agreed to cooperate to combat a possible rise in political pressure for trade protectionism as economic conditions worsen. Paulson said some in China will blame hard times facing its exporters on Beijing's decision to let the yuan rise against the dollar.
"I think the Chinese recognize, as we do, how important currency reform will be to rebalancing growth," Paulson said, referring to Beijing's effort to reduce reliance on exports.
China also said it would allow the local arms of foreign banks to increase the money they have available for lending by temporarily permitting them to receive loans from affiliates abroad. The move might be intended to boost foreign lending to help finance a multibillion-dollar Chinese economic stimulus package announced last month. China has lifted lending limits on its own banks and sharply cut interest rates in an attempt to spur borrowing by companies and consumers.
China's economic growth is expected to slow this year to about 9 percent, down from last year's 11.9 percent.