The United States and China plan to hold high-level meetings two times each year to discuss economic issues. The talks, called the U.S.-China Strategic Economic Dialogue, will be the first of their kind. The first meeting is expected before the end of the year.
The agreement was announced last week during a visit to China by Treasury Secretary Henry Paulson. The announcement was the main result of his trip. Mister Paulson says the meetings will be part of a long-term process. But he noted in Beijing that his job is also to get short-term results.
He will lead the American side. China's top negotiator will be Vice Premier Wu Yi. She noted that President Bush proposed the talks to President Hu Jintao in a telephone call in August.
Probably the top issue facing the negotiators will be the conflict over the Chinese yuan. Until July of last year, China directly set the exchange rate of the yuan against the dollar. Since then, China has tied the rate to a small group of foreign currencies, including the dollar and the euro.
The immediate effect was a two percent rise in value. The yuan has slowly risen further as the value of the dollar has fallen against other currencies. But the increase has only been an additional two percent.
That is too little for many American businesses, especially manufacturers. They say China's policies have kept the cost of Chinese goods unfairly low on world markets.
Many experts also blame what is seen as a highly undervalued yuan for huge United States trade deficits with China.
But the Bush administration opposes a bill in the Senate to punish China for not letting markets set the value of the yuan. Two senators, Democrat Charles Schumer of New York and Republican Lindsey Graham from South Carolina, proposed the bill. It would place an import tax of almost thirty percent on Chinese goods.
A vote has been delayed, and the House of Representatives would also have to agree to the measure. Congress is about to leave to campaign for November elections.
Secretary Paulson urged China to put market-based reforms in place. He said China’s economy is expanding too quickly for government controls to be enough.
Mister Paulson did business in China when he led the investment bank Goldman Sachs. He has visited China about seventy times. This was his first visit since he became Treasury secretary in July.
