Snow 'astonished' by changes in Shanghai
Updated: 2005-10-12 19:20
Both sides say the currency issue will be on the agenda during the talks, but the Chinese side warned Snow not to push too hard with demands to further loosen the yuan's exchange rate.
The U.S. side should "heed fully the Chinese position on exchange rate reform," Foreign Ministry spokesman Kong Quan said at a regular press briefing Tuesday.
In July, China revalued the yuan by 2.1 percent and scrapped its decade-old peg to the dollar, choosing instead to let it trade in a tightly restricted float against a basket of currencies of its major trading partners.
Since then, the yuan has gained about 0.3 percent against the dollar. On Tuesday, it closed at 8.0879 per dollar.
American manufacturers contend the yuan is now undervalued by as much as 40 percent, making Chinese goods cheaper in the United States and American products more expensive in China. U.S. manufacturers argue this is the prime reason for the huge trade gap between the two nations, which surged to $162 billion last year, a record U.S. trade gap with any country.
"We're going to continue to talk privately about these matters," Snow said while visiting Tokyo en route to Shanghai. "It will be in China's interest and the interest of the global economy as well."
Last week, China said its global trade surplus could surge to $100 billion this year, triple last year's gap of $32 billion.
The mounting trade surplus was reason for concern, China's central bank governor, Zhou Xiaochuan, said in comments carried by state press Wednesday, but added that revaluing the currency was not the answer. He stressed the need instead for boosting domestic demand.
Zhou's comments echo previous remarks by Beijing officials who have ruled out further revaluations, saying they would allow the yuan to adjust gradually while making other policy changes.
The U.S. Congress wants more forceful action. One measure with widespread support would impose 27.5 percent tariffs on all Chinese imports unless Beijing takes more steps to allow its currency to rise in value.
Chinese and U.S. negotiators, meanwhile, were due to begin talks in Beijing on a trade dispute resulting from surging Chinese textile and clothing exports following the lifting of global textile quotas on Jan. 1.
Snow and Greenspan will also attend a weekend gathering of the so-called "Group of Twenty," or G-20 industrial and developing nations, being held south of Beijing.
Snow was due to travel on to the western city of Chengdu later Wednesday.