Bush Urges China To Strengthen Currency

Chinese ministers and senior Bush administration officials fail to reach a breakthrough on the two countries' biggest economic dispute.

WASHINGTON (AP) - The largest high-level Chinese delegation ever to visit the United States has heard urgent calls this week to strengthen the value of China's currency from President George W. Bush and from frustrated U.S. lawmakers.
But despite the pressure, the Chinese ministers and senior Bush administration officials have failed to reach a breakthrough on the countries' biggest economic dispute.
The Chinese leave Washington on Friday, with U.S. lawmakers warning of retaliation if there is no action on China's undervalued currency. Chinese Vice Premier Wu Yi, the delegation's leader, has said a ''rising tide of trade protectionism'' in the U.S. will jeopardize both sides' interests.
Bush on Thursday told Wu that the United States is ''watching very carefully as to whether or not they will appreciate their currency.''
After their meeting, Bush said the United States is ''making it clear to China that we value our relationship, but the $233 billion trade deficit must be addressed.'' Strengthening China's currency, he said, is one way to deal with the deficit. ''This is a complex relationship,'' Bush said. ''There's areas where there's friction, and we've just got to work through the friction.''
At high-level economic talks that ended Wednesday, China rejected U.S. requests that it accelerate the revaluing of its currency, the yuan, which American manufacturers say is undervalued by as much as 40 percent. That makes Chinese products cheaper for Americans and U.S. goods more expensive in China.
Wu said in a speech Thursday that China takes the trade imbalance with the U.S. seriously and is working to increase U.S. imports into China. But she said China's exchange rate reform ''will advance in an orderly way.''
After talks Thursday with Wu, Senator Harry Reid, leader of the Senate's Democratic majority, warned that ''if China and the Bush administration won't take action to bring about more balance, there is growing sentiment in Congress to act.''
Senator Debbie Stabenow, a Democrat from the U.S. auto manufacturing state of Michigan, said after another closed-door meeting: ''We spent a lot of time on currency manipulation, and they spent a lot of time trying to convince us that things are getting better.'' At one point, Stabenow said, one of Wu's ministers urged the U.S. side to be patient. ''I said, 'People in Michigan are losing their jobs because of the violation of the trade laws, and it's very difficult to be patient when you're losing your job,''' Stabenow said.
Zhu Guangyao, assistant Chinese finance minister, told reporters that Wu stressed in her talks with Congress that it would be ''inappropriate to use non-economic means'' to solve differences, referring to retaliatory legislation.
Despite the congressional criticism, both Wu and Treasury Secretary Henry Paulson, head of the U.S. delegation at the talks, sounded positive about the importance of the twice-a-year ''strategic economic dialogue'' between the countries.
Paulson said Thursday before Wu's speech that the talks, which will happen next in China in December, are a way to manage a relationship that will have ''inevitable challenges and tensions. We have much work to do and little time in which to do it.''
AP writer Ken Thomas contributed to this report.
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