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Economy dominates US-China talks US and China 'committed to trade'
(about 7 hours later)
US and Chinese officials, meeting in Washington, are to discuss the need for emerging economies to have more say in the world's financial system. The US and China are committed to fighting protectionism, US Treasury Secretary Timothy Geithner has said following two days of high-level talks.
US Treasury Secretary Timothy Geithner is meeting Chinese Vice Premier Wang Qishan for a second day of high-level talks between the two countries. He said the two countries shared an interest in ensuring that trade remained "open and rules-based".
They will also discuss the world trade system and ways to cooperate to prevent a repeat of the economic crisis. He was speaking after meeting Chinese Vice Premier Wang Qishan in Washington.
China also expressed concern about the dollar's role in the financial system. Mr Geithner said China had agreed to boost domestic consumption and the US to toughen financial regulations to prevent another financial crisis.
Mr Geithner said the two countries were committed to building a strong and stable financial system that would lead to more balanced global growth. After the two-day Strategic and Economic Dialogue, as the talks are known, the treasury secretary told reporters: "The United States and China are among the biggest beneficiaries of the global trading system and share a common interest in ensuring that global trade and investment remain open and rules-based".
KEY ISSUES Values of dollar and yuanThe US will press China to rely less on exports and more on domestic consumptionChina will push for the US to make curbing inflation a priorityBoth sides will seek reassurances over accusations of trade protectionismNorth Korea and Iran's nuclear programmesClimate change and clean energy Mr Geithner said the talks concluded with an agreement from China to increase domestic consumption to reduce its reliance on exports to US markets.
"Today, we will discuss governance reforms to help the IFIs (international financial institutions) be more representative of dynamic emerging economies, as well as strengthen their capacity to prevent future crises," he added. He added that in turn the US would implement tougher financial regulations.
China has long called for greater say at the International Monetary Fund and other bodies. The administration has asked Congress to increase capital requirement for banks to reduce exposure to debt default and strengthen the financial system.
The two will also discuss ways to prevent the financial crisis leading to a rise in protectionism. Dollar fears
"We call on China and the United States to refrain from taking any protectionist measures," Mr Wang said before the talks re-convened behind closed doors. Meanwhile, US Secretary of State Hillary Clinton led separate discussions at the State Department, focusing on nuclear issues.
Secretary Hillary Clinton was leading a separate set of discussions at the State Department that were expected to focus on North Korea. Afterwards, she said the US and China were united against Iran becoming a nuclear weapons state.
The two-day Strategic and Economic Dialogue, as the talks are known, will conclude later with a news conference.
Differences
While the two sides appear to have found common ground in public, analysts say that differences remain.While the two sides appear to have found common ground in public, analysts say that differences remain.
In particular, China is worried about the value of the US dollar.In particular, China is worried about the value of the US dollar.
It holds huge amounts of US debt - more than $800bn (£486bn) of US Treasury securities alone.It holds huge amounts of US debt - more than $800bn (£486bn) of US Treasury securities alone.
It fears Mr Obama's stimulus spending will stoke inflation in the United States, eroding the value of the dollar and making the US debt China holds worth a lot less. It fears Mr Obama's stimulus spending will stoke inflation in the US, eroding the value of the dollar and making the US debt China holds worth a lot less.
"As a major reserve currency-issuing country in the world, the US should properly balance and properly handle the impact of the dollar supply on the domestic economy and the world economy as a whole," Mr Wang said. "As a major reserve currency-issuing country in the world, the US should properly balance and properly handle the impact of the dollar supply on the domestic economy and the world economy as a whole," Mr Wang said earlier on Tuesday.
Meanwhile, US manufacturers complain they cannot compete fairly with their Chinese competitors, accusing Beijing of deliberately devaluing its currency to make its exports seem cheaper.Meanwhile, US manufacturers complain they cannot compete fairly with their Chinese competitors, accusing Beijing of deliberately devaluing its currency to make its exports seem cheaper.