China, US pledge to cut trade imbalances

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CHINA yesterday pledged to allow more flexibility in its exchange rate regime, and the United States promised to increase national savings rates in a joint effort to reduce trade imbalances.

3 r& L1 `4 c6 iWrapping up a high-level economic dialogue in Beijing, government representatives also agreed that the New York Stock Exchange and NASDAQ would open offices in China.
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In addition, the two nations concluded a deal facilitating financing to support US exports to China and agreed to relaunch negotiations on air services in January.
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. |' a  C) x/ `; c, }The two-day session was aimed at examining the strategic issues affecting trade relations between the two countries.

9 o7 A- l$ r$ K) FThe US delegation was headed by Treasury Secretary Henry Paulson and included several other Cabinet secretaries and Ben Bernanke, chairman of the US Federal Reserve.
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9 p4 k5 m  Z" V3 [  bThe session was co-chaired by Chinese Vice Premier Wu Yi and Paulson. President Hu Jintao and Premier Wen Jiabao also met with Paulson and the US delegation in Beijing yesterday.

' `4 g0 l2 X% w7 w) t"The dialogue not only helps improve Sino-US economic and trade cooperation, but it also has a positive impact on development of the regional and world economy," Hu said.

  @3 R' t$ ^  T3 }Vice Premier Wu told reporters after the session that the two countries reached consensus on a number of points, "although we maintain different views on some issues."

+ Y; r+ ]" O: }$ TPaulson also cited progress, saying, "It is important and encouraging that we have agreed on so many principles in the dialogue."
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Later yesterday Bernanke praised China in a speech to the Chinese Academy of Social Sciences.

' D: x% x* X/ p  P/ M/ M"China's development and its opening up to the global economy have benefited the United States in many ways," he said.
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Bernanke said China is now the second-largest source of US imports. "These imports boost US real incomes by allowing US households to purchase goods and US firms to purchase intermediate inputs at lower cost," he said.
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0 r, M) `+ z& s* W7 w. ]; \0 S- Q+ o"China is also a growing market for investment and exports by US firms. Since China joined the WTO (World Trade Organization), US exports to China have more than doubled."
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) ~4 Q" O9 S# S; U! d! `3 pBernanke agreed that as China develops further, its families and companies will demand a greater variety of goods and services, enhancing opportunities for producers in industrial countries, including the United States.

He described the China-US economic relationship as one "of extraordinary importance," saying both countries "have much to gain from interactions with each other."

"Serious challenges exist as well, requiring both countries to address such areas as energy, the environment, intellectual property rights and global imbalances," Bernanke said.

* P$ Q/ z# r( k  K5 yThe Fed chief suggested more flexibility in China's currency and a reduction in its domestic savings, saying movement on both tracks would help the Chinese and the world economy. He also stressed that the US must avoid protectionism.

* r' |1 c, K( q4 }7 D+ nThe US delegation was the highest-profile trade mission the United States has ever sent to China.