China to learn from US mistakes

Chinese financial officials have said they are keen to learn from the mistakes made by the US that resulted in the sub-prime mortgage crisis, reported The BBC.

But as two days of talks began, US envoy to China Alan Holmer warned that Beijing should not use US woes to block access to its financial markets.

More emphasis was placed on trading and energy than on China's currency policy as a rising yuan helps ease tensions.

The yuan has risen in value by 20% over the past three years. At a high of 6.8918 per dollar, it is at its strongest level against the dollar since it scrapped its peg to the US currency in July 2005.

Mr Holmer described this movement as a "positive development". "It is significant and welcome and we hope that it will continue," he added.

The Chinese currency has long been a bone of contention among US manufacturers, who claim the currency is too cheap and gives Chinese exporters an unfair advantage. Treasury Secretary Henry Paulson instigated the regular talks between the US and China, known as the Strategic Economic Dialogue, to tackle trade and currency frictions when he joined the Bush administration in 2006.

The hope was that it would lead to broad changes in Chinese economic policy that would help to address the US trade deficit with China, which last year hit a record $256.2bn. Mr Paulson has said that exchange rate reform is critical to China's social stability. However, with the US economy still reeling from the sub-prime mortgage meltdown and resulting credit crunch, it is easier for China to reject such criticism.

Chinese officials have promoted their own more assertive style of economic management and regulation and chided the US for allowing the dollar to slide. Mr Paulson said that the dialogue was important even when it only produced incremental changes.

"The United States and China don't always agree. Sometimes we may disagree quite strongly, but we keep talking," he said.