China’s Wen seeks to reassure Obama on trade

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”.