Page last updated at 01:31 GMT, Wednesday, 18 June 2008 02:31 UK

China to learn from US mistakes

Bundles of yuan notes
The US has long urged Beijing to let its currency strengthen

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.

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.

Currency dispute

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.

Business deals

China's commerce minister Chen Deming, who is taking part in the talks, said US and Chinese companies have signed business deals worth more than $13.6bn.

The agreements cover 35 deals in sectors ranging from the car industry to telecommunications.

In one deal, US car giant General Motors said it had signed a pact worth a $1bn.

It is not clear whether the next US administration will continue the talks.

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