US Treasury Secretary Paulson wraps up China visit with little to show

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US Treasury Secretary Henry Paulson today wrapped up a four day visit to China where he
urged the Asian giant to press on with economic reforms, but he heads back to Washington
with little to show for his efforts.

Crucially, Paulson returns without fresh assurances from China that it will allow its currency to
appreciate faster.

Briefing reporters before his departure, Paulson said the Chinese government is committed to
currency flexibility and that he "made the case that they and the whole world would be better off if they increased (the yuan) in the short term" and worked toward market-determined
exchange rates in the intermediate term.

The two sides have agreed to meet again in October to further discuss trade ties between the two countries. "You can do a lot on the toldephone," Paulson said, "but you are better off
when you can sit down face to face and have a candid discussion."

Asked if the Chinese government s decision to shift some of its currency reserves from US
Treasuries to a sovereign wealth fund threatened the bond market, Paulson said no.

Once countries have reserves, it makes sense for them to invest in ways that make sense
economically, "to get risk adjusted returns," he explained.

"We welcome sovereign wealth funds in the US. I think foreign direct investment is a good
thing."

The Bush administration is under intense and growing pressure from lawmakers in Congress to
get China to revalue its currency as the trade gap with China is on track for another record year.

Last year, the US recorded a recorded a 233 bln usd shortfall.

China dropped its yuan peg to the dollar two years ago and the currency has since appreciated more than 9 pct to about 7.56 yuan to the dollar.

An undervalued yuan makes Chinese imports cheaper in the United States and therefore more
difficult for US manufacturers to sell their wares. Some say the yuan is undervalued by as much
as 40 pct.

Last week, the Senate Finance Committee approved legislation that would make it easier for the US to retaliate if a trading partner is found to have a "misaligned" currency.

Under current law, the US can only retaliate if a country is found to have "manipulated" its currency, and the Bush administration has never cited China.

Paulson repeated his argument that legislation is the wrong way to proceed, is counter
productive and would undermine what the US is trying to accomplish with China. He has
declined to say whether he would recommend President Bush veto the measure if it makes it all the way to Bush s desk for signature into law.

The Chinese government did say it would deliver on its commitment to open up securities
markets. The agreement to lift a ban on brokerage joint ventures came during the May
Strategic Economic Dialogue meeting in Washington. Officials now say it will actually be lifted in
early fall.

Paulson offered praise for China s environmental efforts to conserve Qinghai Lake in the
underdeveloped region of western China, drawing on it as an example of how the two countries can co-operate.

"It is a symbol of how our two countries can work together on climate change and other
environmental issues," Paulson told Chinese President Hu Jintao as they began their one hour
meeting.

Analysts said Paulson s trip to the region was an offer of goodwill to Hu, who is very interested
in promoting western China and has directed central government funds to the region to protect the lake and surrounding areas.

Hu publicly thanked the US Treasury chief for visiting the remote region.

In the briefing, reporters also asked Paulson about the current financial market turmoil. His
answers stuck to the talking points he s been using since last week: the market is "repricing
risk," the housing crunch overall is "contained, and we have a healthy economy."

"We have the strongest global economy that I have seen in my business lifetime," he repeated.

BY

美國財長保爾森敦促中國加快人民幣升值步伐, 稱他認為人民幣升值速度不夠快。

儘管作了上述表示, 但保爾森仍認為美國通過立法施壓並非解決問題之道, 稱此舉將將破壞中美對話。

保爾森表示, 目前並無跡像顯示人民幣升值損害了中國經濟, 中國上半年GDP增長了11.5%。

人民幣兌美元已由兩年前實施固定匯率制時的8.28升至7.57 (9%), 但美國各方仍抱怨升值速度緩慢。

保爾森是在結束訪華之際作了上述表示, 他還稱, 中國應進一步推進金融市場改革。

JKL

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