Paulson says China needs broader reforms
Paulson says China needs broader reforms
By Richard McGregor in Beijing
Copyright The Financial Times Limited 2007
Published: July 30 2007 17:55 | Last updated: July 31 2007 03:48
Currency policy is just one part of broader economic reforms that Beijing must undertake to maintain growth and competitiveness, Hank Paulson, US Treasury secretary, said on Monday ahead of talks in the Chinese capital.
Mr Paulson said the currency had become a “proxy for reform” but that it had to be addressed alongside other structural problems in China – such as underdeveloped open capital markets.
“It is only by having capital markets that are efficient and function well that we are going to able to get to a market-determined currency,” Mr Paulson told the Financial Times.
Over the next two days Mr Paulson will be meeting Hu Jintao, China’s president, and Wu Yi, a vice-premier and his direct counterpart, in the twice-yearly strategic dialogue between Washington and Beijing established in 2006.
The former head of Goldman Sachs is under pressure from the US Congress to deliver concrete results from the dialogue, especially on the currency, which China’s critics in the US say is unfairly manipulated to benefit exporters.
“Although they have moved the currency, it clearly should move more,” Mr Paulson said.
The renminbi has appreciated by about 9.4 per cent against the US dollar since Beijing broke its peg to the greenback in mid-2005, but it has weakened against other currencies, notably the euro.
He said the strategic dialogue was “forward looking”, to manage an increasingly complex relationship, but could also handle sensitive issues when they emerged.
“I think many people in the world are focused on the wrong thing and are worried that China is going to keep doing as well as it has, and overtake and out-compete other countries,” he said.
“Frankly, China doing well economically is good for China – and the rest of the world.”
The next dialogue is due to be held in Beijing in December, just after the Communist party congress, which will choose China’s top leadership for the next five years.
Mr Paulson began his trip on Monday in Qinghai, in western China, allowing him to highlight Washington’s desire to increase co-operation on issues such as the environment and energy before the more contentious discussions in Beijing.
Mr Paulson’s efforts to solidify the relationship must combat tensions caused by the rising bilateral trade imbalance, which was a record $233bn in 2005, on US figures.
A senior Commerce Ministry official, Jin Xu, in a recent speech just published in a Chinese magazine, said the deficit “will probably continue to grow for the foreseeable future”.
He added: “As for what the root of the problem is and how to address it, I don’t think we have an answer.”
By Richard McGregor in Beijing
Copyright The Financial Times Limited 2007
Published: July 30 2007 17:55 | Last updated: July 31 2007 03:48
Currency policy is just one part of broader economic reforms that Beijing must undertake to maintain growth and competitiveness, Hank Paulson, US Treasury secretary, said on Monday ahead of talks in the Chinese capital.
Mr Paulson said the currency had become a “proxy for reform” but that it had to be addressed alongside other structural problems in China – such as underdeveloped open capital markets.
“It is only by having capital markets that are efficient and function well that we are going to able to get to a market-determined currency,” Mr Paulson told the Financial Times.
Over the next two days Mr Paulson will be meeting Hu Jintao, China’s president, and Wu Yi, a vice-premier and his direct counterpart, in the twice-yearly strategic dialogue between Washington and Beijing established in 2006.
The former head of Goldman Sachs is under pressure from the US Congress to deliver concrete results from the dialogue, especially on the currency, which China’s critics in the US say is unfairly manipulated to benefit exporters.
“Although they have moved the currency, it clearly should move more,” Mr Paulson said.
The renminbi has appreciated by about 9.4 per cent against the US dollar since Beijing broke its peg to the greenback in mid-2005, but it has weakened against other currencies, notably the euro.
He said the strategic dialogue was “forward looking”, to manage an increasingly complex relationship, but could also handle sensitive issues when they emerged.
“I think many people in the world are focused on the wrong thing and are worried that China is going to keep doing as well as it has, and overtake and out-compete other countries,” he said.
“Frankly, China doing well economically is good for China – and the rest of the world.”
The next dialogue is due to be held in Beijing in December, just after the Communist party congress, which will choose China’s top leadership for the next five years.
Mr Paulson began his trip on Monday in Qinghai, in western China, allowing him to highlight Washington’s desire to increase co-operation on issues such as the environment and energy before the more contentious discussions in Beijing.
Mr Paulson’s efforts to solidify the relationship must combat tensions caused by the rising bilateral trade imbalance, which was a record $233bn in 2005, on US figures.
A senior Commerce Ministry official, Jin Xu, in a recent speech just published in a Chinese magazine, said the deficit “will probably continue to grow for the foreseeable future”.
He added: “As for what the root of the problem is and how to address it, I don’t think we have an answer.”
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