Economy

No change in currency policy, Xi tells Paulson

By Qin Jize and Hu Haiyan (China Daily)
Updated: 2010-04-10 17:47

No change in currency policy, Xi tells Paulson

Vice President Xi Jinping (fight) shakes hands with former US Treasury Secretary Henry Paulson on Friday. Xi emphasized the importance of Beijing's currency policy. [Ren Chenming / China News Service]

Bo'ao, Hainan - Vice President Xi Jinping on Friday emphasized the importance of maintaining a stable yuan during his meeting with former US Treasury Secretary Henry Paulson.

Calling Paulson a politician and entrepreneur with a strategic point of view, Xi hoped the well-known "China hand" could continue to exert his influence on a closer financial dialogue and cooperation between the two countries in the post-crisis period.

Paulson is one of the founders of the Sino-US Strategic Economic Dialogue (SED) and as he writes in his book On the Brink, "The SED's success is one of the achievements I am most proud of."

Paulson told Xi that China-made products are conducive to the maintenance of the US' low-inflation rate and the increase in consumer choices.

"US-China cooperation is a win-win deal and I will keep on telling people the importance of this relationship," said Paulson, according to a foreign ministry statement.

Xi met the former US Treasury Secretary on the sidelines of the annual conference of Bo'ao Forum for Asia, which is scheduled to open on Saturday.

Dozens of foreign leaders and senior officials have joined in the two-day meeting, which is focused on Asia's green and sustainable development.

US Under Secretary of State for Economic, Energy and Agricultural Affairs Robert Hormats, will participate in the panel discussion on "From G8 to G20: New Architecture, New Rules and new players."

This is the first time for an incumbent, senior US official to take part in the Bo'ao Forum at a time when the two countries are arguing over the valuation of the Chinese yuan.

Hormats' appointment is widely seen as part of US Secretary of State Hilary Clinton's refocus on the newly rising powers including China and India.

He is quite experienced in dealing with China-related issues and served as senior economic advisor to Henry Kissinger when he was very young.

Hormats is now one of the key players in the China-US Strategic Dialogue and analysts speak highly of his attendance at Bo'ao forum, saying it is a further sign of the warming up of bilateral ties.

He also met with China's State Council Information Office Director Wang Chen on Thursday in Beijing on the development and administration of the Internet.

Starting with US Deputy Secretary of State James Steinberg's February visit to Beijing, both countries have been making a flurry of diplomatic efforts to patch up frayed ties soured by Taiwan, Tibet, currency and trade issues.

Intensive contacts have been seen in recent weeks after US President Obama reiterated the one-China policy and held a phone conversation with President Hu Jintao.

In addition, US Treasury Secretary Timothy Geithner made a surprise stopover in Beijing on Thursday and met with Vice Premier Wang Qishan, the top economic official for about 75 minutes in the VIP lounge of the Beijing airport.

Some analysts predicted the Obama administration's efforts to mend strained ties will probably result in a currency change but some don't.

"A short-run adjustment in the exchange rate cannot stop the long-term trend caused by more fundamental problems," Fan Gang, an economist who until recently was an adviser to the central bank, wrote in a recent article.

Yuan Peng, an expert on US studies at China Institutes of Contemporary International Relations predicts, "Maybe it is after the China-US Strategic and Economic Dialogue (SAED) expected to be held in May that we can see whether the yuan will appreciate or not."

Despite recent problems between the two countries, analysts said recently frequent high-level exchanges are serving to get ties back on track.

Commenting on recent high-level exchanges, Zhou Qi, a US studies expert at the Chinese Academy of Social Sciences (CASS), said the two countries "have made some improvements in the ways they communicate".

"Now both nations tend to get problems on the table to discuss when they have differences, which is a sign of improvement for the Sino-US relationship, "she said.

But differences will always exist between the two countries, Zhou added, as their values and political systems are far too different.