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U.S. says China recognizes
need for stronger yuan
Glenn Somerville and Eadie Chen
Reuters
Thursday December 13, 2007
U.S. Treasury Secretary Henry Paulson came away
from two days of talks on Thursday convinced that China sees the
need for a stronger yuan and with a promise that Beijing will
open its financial markets a bit wider.
The grand-sounding "strategic economic dialogue" produced
only modest immediate gains but Paulson said it provided a foundation
on which to expand cooperation between two nations whose ties
he deems vital to global economic prosperity.
The exchange rate was a major focus of the meetings because,
as Paulson put it, the pace of the yuan's rise had effectively
become a proxy for China's willingness to permit market forces
to play a greater role in its economic development.
(Article continues below)
Paulson sought no specific commitments from Beijing on the yuan,
but he said Chinese policy makers now knew that a stronger exchange
rate would help them to fight inflation.
"The Chinese recognize growing inflationary pressures in
their economy and that a more flexible currency expands their
ability to use monetary policy to stabilize their economy,"
Paulson said at a closing news conference.
China's central bank, which keeps the currency on a tight leash,
let the yuan rise on Thursday to its highest level since it was
revalued and depegged from the dollar in July 2005. The bank is
battling inflation of 6.9 percent, an 11-year high.
Full
article here.
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