Snow, Chinese Officials Talk About Yuan Controls

The U.S. Treasury secretary said today that he had “good, frank, open” discussions with Chinese officials about concerns over their tight currency controls, and that both sides would probably make progress on the issue.

John W. Snow, who was in Beijing for a two-day visit, met Chinese officials including the country’s finance minister and central bank governor.

A main point in the talks is the Chinese government’s control over the yuan currency.

Critics say its fixed exchange rate is a protectionist attempt to keep down the price of China-based exports in the world market.

“I think we had good discussions and good, frank, open review of the issues, and that’s a foundation for progress,” Snow told reporters this morning. “We’re laying out our point of view and [the Chinese] are listening and responding.”

The yuan has been fixed at about 8.28 to the U.S. dollar since 1994. It is allowed to fluctuate, but only in tiny increments -- a fraction of 1% -- and in closely regulated trading by those who have cleared official hurdles.

In recent weeks, China has taken some steps toward a slightly more flexible exchange system, such as loosening some restrictions on the handling of foreign currency by companies and by Chinese tourists who are traveling abroad.

The English-language China Daily newspaper defended Beijing’s position in its top opinion column Tuesday.

“The critics that believe China manipulates the yuan’s value assume that every currency in the world should be floated in the market,” the editorial said. “This assumption in itself is porous.”

It added: “Should China now give in to pressure only to face dire consequences later? No way.”

The yuan issue also is likely to come up at a meeting of the Asia Pacific Economic Cooperation forum this week. Snow and Chinese Finance Minister Jin Renqing are scheduled to attend. The economic cooperation is made up of 21 Pacific Rim countries and territories.