China Official Gives Geithner Pat On Back, Avoids Yuan Issue - Wall Street Journal

BEIJING (Dow Jones)--A senior Chinese official, speaking ahead of a key meeting with American counterparts next week, went out of his way to praise U.S. Treasury Secretary Timothy Geithner for "pragmatic" remarks on China-U.S. ties and shrugged off criticism of Beijing's policies on its currency and state companies.

Vice Minister of Finance Zhu Guangyao told reporters Saturday that Beijing had noted Geithner's remarks, made earlier this week in San Francisco, and that it agreed with his key points that the two economies are tightly linked and that American economic success depends on the U.S., not China.

"The core [of his remarks] is that our economies are highly complementary," Zhu said. "We concur in this assessment."

The two sides will meet at the U.S.-China Strategic and Economic Dialogue in Beijing May 3-4. The U.S. Treasury secretary and Secretary of State Hillary Clinton are scheduled to meet with Chinese Vice Premier Wang Qishan and State Councilor Dai Bingguo as well as other senior Chinese officials.

Geithner had other praise for China, saying Beijing had made progress on a number of fronts--allowing some appreciation of its currency, respecting U.S. intellectual property rights and making some openings for U.S. exports.

He also commented on what he said was an inaccurate perception in the U.S. that China is a "huge economic challenge to the United States."

But Geithner also said China still needed to let its yuan currency appreciate further, and he added that China's state companies, which now benefit from significant preferential policies, need to act more like commercial firms.

Zhu acknowledged these remarks but refused to be drawn on either issue, saying only that Geithner also noted China had its own requests for the U.S.

U.S. businesses and labor unions have accused China of keeping its currency undervalued to give exporters a competitive edge. The U.S. has in the past called on China to let the yuan appreciate though the currency issue has been less of a thorn in bilateral relations lately.

China recently expanded the daily trading band for the yuan against the dollar in a move that will likely make the Chinese currency somewhat more responsive to market forces.

Zhu also said the U.S. and China will resume technical-level talks on a two-way investment protection agreement on the sidelines of the main meetings in Beijing.

He said the negotiations were suspended due to the U.S. side's internal assessment of the text, and the internal consultations and review have now been completed.

-By William Kazer, Dow Jones Newswires; (8610) 8400-7706; william.kazer@dowjones.com