Page last updated at 00:17 GMT, Wednesday, 29 July 2009 01:17 UK

US and China 'committed to trade'

Hillary Clinton and Timothy Geithner talk about their meeting

The US and China are committed to fighting protectionism, US Treasury Secretary Timothy Geithner has said following two days of high-level talks.

He said the two countries shared an interest in ensuring that trade remained "open and rules-based".

He was speaking after meeting Chinese Vice Premier Wang Qishan in Washington.

The US Secretary of State Hillary Clinton said that both countries had the common goal of ensuring Iran did not become a nuclear power.

"China shares our concerns about Iran becoming a nuclear weapons state. The potential for destabilising the Middle East and Gulf is viewed similarly by the Chinese," Mrs Clinton said.

China warned US against letting dollar value slide
US encouraged China to bolster domestic consumption
Both agreed they would resist trade protectionism
China, the US says, shares concerns over Iran's nuclear programmes
China and US pledged to work together on climate change

After the Strategic and Economic Dialogue, as the talks are known, Mr Geithner told reporters: "The United States and China are among the biggest beneficiaries of the global trading system and share a common interest in ensuring that global trade and investment remain open and rules-based".

Mr Geithner said the talks had concluded with an agreement from China to boost domestic consumption and reduce its reliance on exports to US markets.

He added that in turn the US would implement tougher financial regulations.

The administration has asked Congress to increase capital requirement for banks to reduce exposure to debt default and strengthen the financial system.

Dollar fears

The BBC's Caroline Hepker in New York says the tone of the talks suggested that both the US and China recognised the need to make their mutual interdependence less combative and more collaborative.

Two states have recognised that the only way to move forward was through dialogue, she says.

US Treasury Secretary Timothy Geithner (L) greets Chinese vice premier Wang Qishan
China and US say they have found common ground but differences remain

While China and the US appear to have found common ground in public, analysts say that differences remain.

In particular, China is worried about the value of the US dollar.

It holds huge amounts of US debt - more than $800bn (£486bn) of US Treasury securities alone.

It fears Mr Obama's stimulus spending will stoke inflation in the US, eroding the value of the dollar and making the US debt China holds worth a lot less.

"As a major reserve currency-issuing country in the world, the US should properly balance and properly handle the impact of the dollar supply on the domestic economy and the world economy as a whole," Mr Wang said earlier on Tuesday.

Meanwhile, US manufacturers complain they cannot compete fairly with their Chinese competitors, accusing Beijing of deliberately devaluing its currency to make its exports seem cheaper.

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