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Paulson urges China to open up markets
2006-09-20
U.S. Treasury Secretary Henry Paulson on Thursday called on China to open its financial markets wider to foreign competition, saying it was in the country's interests to do so and would boost prosperity. "One of the most important, fundamental things this country could do is to develop very strong capital markets. And the right way to do that is to open up to competition," Paulson told a student audience at the prestigious Tsinghua University. He said allowing more foreign investment in China's financial industries and more competition would make the country's economy healthier and improve investment returns for Chinese families. Paulson's visit comes as relations between the countries, once buoyed by robust trade, have sunk in recent years with a soaring Chinese trade surplus and critics in Washington accusing Beijing of keeping its currency undervalued to make Chinese exports cheaper. Washington also wants China's help in restarting suspended world trade talks. His comments so far have been conciliatory, stressing the potential benefits to China of opening wider to the world economy. On Wednesday, Paulson and Chinese Vice Premier Wu Yi announced the launch of a new high-level economic dialogue meant to repair the soured relations. The strategic economic dialogue will deal with long-range and big-picture issues that affect the U.S. and China, they said. Neither Paulson nor Wu said whether the currency or the trade gap would be addressed in the dialogue. A U.S. Treasury Department statement said Washington would continue to press Beijing over those issues, as well as China's need for better protection of intellectual property. Under pressure from the U.S. and other countries, Beijing re-valued the yuan by a slight 2.1 percent against the dollar 14 months ago but has allowed the currency to rise in value only another 2.2 percent since then, even as the dollar has sunk against most major currencies. On Thursday morning, the yuan hit a new high against the U.S. dollar for the sixth straight day. Paulson suggested that the dialogue should put economic relations in a new perspective. "As global economic leaders we share responsibility to maintain open markets at home and promote free and fair trade in all countries," Paulson told reporters in Beijing's Great Hall of the People on Wednesday, the first day of his visit. The dialogue "reflects the 21st century global economy and redefines the economic relationship between the United States and China." Such talk was likely well-received in Beijing, which wants to be treated as an equal partner by Washington, and was in keeping with a new tone Paulson has sought to inject in U.S.-China relations. The Bush administration's frequent use of public pressure in the past few years produced only marginal changes in Chinese policy on trade and the currency. Paulson dismissed the possibility of breakthroughs on the currency or trade disputes on this trip. He said its goal was the creation of a new dialogue with a "better, more productive tone." "I don't think I gave anybody any impression that I would make my first trip to China (as treasury secretary) and come home with a solution to long-term problems," he said at a news conference after meeting Wu. "I never expected anything other than a first set of discussions."
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