WASHINGTON—Chinese and U.S. officials, facing rising tensions over Beijing's currency policy, struck a more conciliatory tone Wednesday, though they didn't offer immediate solutions for resolving their differences.
At issue is the value of the Chinese yuan. Many policy makers and economists in the U.S. and elsewhere say Beijing has kept its currency artificially low against the U.S. dollar, making exports cheaper and giving the country a competitive advantage in the global market. China has rejected calls for it to revalue its currency, warning that any efforts to pressure it to act would be counterproductive.
Amid harsh rhetoric, Chinese Vice Commerce Minister Zhong Shan and Treasury Secretary Timothy Geithnersounded some conciliatory notes on Wednesday.
Mr. Zhong, making a 30-hour visit to the U.S. to try to ease bilateral tensions, expressed confidence that politicians from the two countries "have the wisdom and ability to resolve existing problems."
Mr. Geithner said he believed China would allow its currency to appreciate over time, according to a CNN interview transcript. While the U.S. "can't force them to make that change…I think we can work through the tough things we have together," Mr. Geithner said.
The stakes are high for both sides. The U.S. and China are among each other's biggest trading partners, and numerous U.S. companies have investments in China. The U.S. is increasingly looking to China to cooperate on international strategic issues, such as nuclear nonproliferation and the fight against terrorism.
Under U.S. law, the Treasury Department must decide by April 15 whether to label China a currency manipulator as part of a biannual report to Congress on the currency practices of major U.S. trading partners. The Obama administration has in the past declined to label China as such. But with the U.S. continuing to grapple with a high jobless rate while China's economy roars ahead, U.S. lawmakers in particular have grown increasingly bellicose about Beijing's currency policy.
Fred Bergsten, director of the Peterson Institute for International Economics, a Washington-based think tank, told lawmakers at a hearing before the House Ways and Means Committee on Wednesday that a correction in the value of the yuan "would be the most cost-effective step that can be taken to reduce the unemployment rate in the U.S."
He said the yuan was undervalued against the U.S. dollar by 40%, and that if that disparity didn't exist, the U.S. current-account deficit would be smaller by $100 billion to $150 billion. That would lead to the creation of an additional 600,000 to 1.2 million U.S. jobs, he said.
A group of senators recently introduced legislation that would force the administration to take action, including applying tariffs to imports from China, if Beijing failed to act on its currency.
Mr. Zhong, in a news conference Wednesday, reiterated Beijing's position that China's currency policy isn't the cause of the U.S.'s economic problems, and that China wouldn't adjust its currency rate under outside pressure. "The Chinese government will only make the decision according to the national condition and the country's development level," he said.
Mr. Zhong suggested that a surge in the yuan could destabilize the global economy, hitting developing nations especially hard and even perhaps causing the value of the dollar to plunge.
Addressing China's face-off with Google Inc., which recently shut down its China site over censorship and cyberattacks believed to have originated in the country, Mr. Zhong said the case wouldn't affect China's policy of openness to foreign investment, or foreign investor interest in China.
Mr. Geithner, addressing the same subject on CNN, said U.S. businesses were "a little bit more concerned about how hard it is to operate in China, on a level playing field." He added: "If you listen carefully to what the Chinese have been saying, even just last week or so, they are very sensitive to the concerns of not playing fairly."
Besides meeting with Mr. Geithner, Mr. Zhong also held talks with other administration officials and spoke at a U.S. Chamber of Commerce breakfast.
