Page last updated at 06:32 GMT, Friday, 5 December 2008

China, US pledge $20bn trade aid

Jin Mao tower
China's economic power may soon rival that of the US

China and the US have pledged $20bn (13.6bn) to help finance global trade, as part of efforts to boost the faltering world economy.

The money will be made available to importers, including those in developing countries, who have found it difficult to get credit to buy goods.

Earlier, China called on the US to save more, blaming its excessive consumption for the financial crisis.

The comments reflect the Asian giant's growing assertiveness.

Trade commitment

"We are both committed to strengthening the global economy," Henry Paulson, the US Treasury Secretary said, at the end of high level talks on the world economy.

Importers around the world have struggled to get credit to buy goods as banks have tightened their lending. This has been a further drag on economic growth, as factories find their customers are short of cash to buy their goods.

The money will be made available through the countries' export-import banks.

But, though symbolically important, correspondents say that the sum involved - $12bn of which will be provided by the US and $8bn by China - is relatively small and unlikely to make huge difference.

Calling the shots

During meetings between US and Chinese finance officials in Beijing, China called on the US to boost its savings rate and to protect Chinese assets and investments in the US.

"The important reasons for the US financial crisis include excessive consumption and high leverage," China's central bank governor, Zhou Xiaochuan, told US officials.

"The United States should speed up domestic adjustment , raise its savings rate and reduce its trade and fiscal deficits," he said.

He also said the US needed to "take the initiative... and reduce its trade and fiscal deficits".

The US is far more used to giving lectures to foreign powers on economic policy than it is on receiving them. The Chinese comments reflect the economic giant's growing assertiveness on the world stage.

During the talks, US officials are also understood to have pressured Beijing to let its currency rise further - the weak yuan is seen as giving Chinese exporters an unfair trade advantage - but no announcements were made on the Chinese currency.

The Chinese economy is growing at around 9% a year, whereas the US economy is in recession.

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