BEIJING, Reuters) – Chinese Premier Wen Jiabao told President Barack Obama his nation does not seek a trade surplus with the United States and wants to balance flows, striking a conciliatory note but avoiding public comment on currency rifts.
Wen made the comments yesterday during a meeting with the U.S. President, according to a report on the Chinese Foreign Ministry website (www.mfa.gov.cn).
“China does not pursue a trade surplus,” Wen said, adding that his government wants “to encourage a steady balancing of bilateral trade.”
“Lively global trade and investment will help to overcome the international financial crisis and accelerate global economic recovery,” said the Chinese Premier, also urging both countries to “together oppose trade and investment protectionism.”
Wen’s comments are unlikely to mollify U.S. industry groups and politicians who say Beijing is holding its yuan currency so low against the dollar that it is stoking a U.S. trade deficit with China and worsening global economic imbalances.
But Wen’s reassuring language, as well as praise for Obama in Chinese state media, set a guardedly upbeat tone at the end of a four-day visit that exposed rifts over trade and currency policy.
“The West’s perception of China has been changing gradually, and a positive turn has occurred as Obama has said more than once during his ongoing Asia tour that the United States would not seek to contain China’s rise but welcome China as a strong and prosperous player in the community of nations,” said a commentary issued by the official Xinhua news agency.
Obama’s words “forged a good starting point to further Chinese-U.S. ties”, it said.
After the talks with Wen, Obama visited the Great Wall, for Chinese people a proud symbol of their heritage.
But the absence of any comment on the yuan in Wen’s published comments was a telling reminder of the rifts remaining as Obama prepared to head for South Korea last evening.
The report said that Obama did raise reform of China’s exchange rate policies.
At a summit on Tuesday, Obama made plain to Chinese President Hu Jintao that he wants movement on China’s currency policy. Hu also avoided mentioning currencies in comments to reporters.
China has had a huge trade surplus with the United States, and is also the largest foreign holder of U.S. government bonds.
The U.S. trade deficit with China widened 9.2 percent in September to $22.1 billion, the highest since November 2008, according to U.S. data released last week.
“A stable, cooperative, forward-looking China-U.S. relationship will benefit our two countries and all the world,” Wen told Obama.
Despite the bright rhetoric, officials and experts from both sides have stressed Obama’s visit will not bring about immediate policy shifts, or end friction over the yuan, U.S. anti-dumping rules, and Washington’s criticism of China’s controls on citizens’ rights and policies in Tibet.
Such summits are about setting priorities for future dealings, not making immediate policy changes, said Jin Canrong, an expert on China-U.S. ties at Renmin University in Beijing.
The issue of currencies has drawn testy comments from U.S. and Chinese officials. China’s Commerce Ministry on Monday rebuffed calls for the yuan to appreciate, signalling resistance to change foreign exchange policy.
Outside pressure has been building on Beijing to let the yuan rise after more than a year of it being nearly frozen in place against the weakening dollar, with the latest appeal voiced by the head of the International Monetary Fund on Tuesday.
But Chinese officials have swatted down speculation of any big moves soon, and the government appears likely to keep the currency on a tight rein at least until the middle of 2010 to cement the country’s economic recovery.
“Any policy changes by China, including on the exchange rate, will be based on its assessment of its own interests, not on external pressure,” said Jin, the professor.
U.S. DOLLAR ASSETS
Wen has voiced his own worries about the U.S. economy.
In March, he took Washington to task over its fiscal policies, saying he was worried about the health of China’s vast U.S. assets, and repeated those worries at a summit in Africa this month.
China has amassed $2.27 trillion of foreign exchange reserves, the world’s largest stockpile, and analysts think about two-thirds of this is invested in dollar-denominated assets.
The Xinhua commentary said the United States, and not only China, needed to absorb some lessons and “figure out effective new ways to tackle its own chronic problems”.