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China aims to deflect U.S. pressure on yuan
(Reuters)
Updated: 2006-03-01 16:19
PLACATE CONGRESS
A U.S. delegation led by James Mendenhall, the U.S. Trade Representative's general counsel, was holding talks in Beijing on trade ties that officials said would focus on the protection of intellectual property rights and access by car parts makers to China's market.
Mendenhall's trip comes hard on the heels of a visit to Beijing on Monday by the U.S. Treasury's senior official for international affairs, Tim Adams.
Adams has so far been silent on his talks, but economists believe he urged Chinese officials to placate Congress by pledging to speed up the yuan's rise ahead of Hu's visit.
Any important decision relating to the currency would be taken at the highest level, but nothing in recent comments by senior officials suggests that a major change is in the offing.
"If the yuan rises too rapidly, a lot of overseas investors might move their factories or companies out of China," Tang Xu, the central bank's research chief, said on Monday.
"That would increase unemployment and hurt our economy, and commercial banks could also face a difficult operating environment," Tang said.
Beijing also argues that its bilateral trade surplus with the United States largely reflects shifting production patterns.
Multinational firms have poured into China to tap its deep pool of cheap labour to process imported components for export.
Such processing trade accounted for 54.7 percent of China's exports in 2005, Zheng Jingping, chief spokesman of the National Bureau of Statistics, wrote in the China Securities Journal.
"This is a characteristic that the United States, Japan and European Union countries do not have," Zheng said.
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