Paulson heading to China as trade frictions grow

July 26, 2007 - 0:0

WASHINGTON (AFP) -- Treasury Secretary Henry Paulson announced plans Tuesday to visit China next week for high-level economic talks amid simmering discontent at home over Chinese trade policies.

The announcement comes amid growing pressure to curb the burgeoning trade gap with China and moves in Congress to punish Beijing for what some say are unfair trade policies. As Paulson was making plans to go to China, the Senate Finance Committee scheduled a meeting to vote on a bill to impose sanctions on a country with a ""misaligned"" currency -- making it easier to act those current laws on currency manipulation. Paulson will ""meet with government officials and discuss the U.S.-China Strategic Economic Dialogue (SED)"" launched last year, a Treasury statement said. Paulson begins his visit Sunday at Qinghai Lake, the largest lake in the country and an example of the environmental challenges faced in China as well as the global nature of these problems, the statement said. On July 31, Paulson goes to Beijing where he will spend Tuesday and Wednesday meeting with Chinese officials including President Hu Jintao and Vice Premier Wu Yi. ""This trip is part of an ongoing process to strengthen our strategic economic relationship -- to address long-term issues such as working with China to rebalance its growth and increase the flexibility of its currency, and also to address short-term issues as they arise,"" Paulson said in the statement. The visit comes amid growing pressure in Washington to deal with the massive U.S. trade deficit with China. Some lawmakers in Washington accuse Beijing of keeping its currency purposefully low to give its exporters an advantage, and of using subsidies and other unfair trade actions. Several bills are pending in Congress that would impose sanctions on China for unfair trade policies. China revalued the yuan by 2.1 percent from 8.28 yuan in July 2005 and has since then allowed the unit to rise about six percent. In May, the daily trading band against the dollar was widened to 0.5 percent from 0.3 percent on either side of a central parity rate, in theory making it possible that the currency could appreciate more quickly. However, U.S. officials have consistently said China needs to move more quickly on currency policy and other economic reforms. Paulson will meet with officials in Beijing ""to discuss a broad range of issues that are critical to the U.S.-China economic relationship,"" the Treasury statement said. Paulson said he would also follow up on issues raised at the SED talks in Washington in May on the environment