By Joe McDonald
AP Business Writer
BEIJING (AP) — The United States and China pledged closer cooperation Tuesday on financial regulation and the environment but did not announce any breakthroughs on a currency dispute after a high-level dialogue overshadowed by Korean tensions.
China agreed to modify a policy on promoting domestic technology development that Washington and others complain might block market access. U.S. officials said Washington still has concerns about the policy and the two sides will hold more talks on it in the coming months.
“This round of the dialogue did not solve all our problems but did produce concrete results,” said U.S. Secretary of State Hillary Rodham Clinton after the annual two-day Strategic and Economic Dialogue.
The talks have highlighted the communist government’s growing assertiveness in promoting its own interests, prompted by China’s rising status as the world’s third-largest economy and its quick rebound from the global downturn.
The two sides made no announcements on progress on China’s currency controls, a key irritant in relations with Washington. Chinese President Hu Jintao promised currency reforms Monday but gave no timeframe and said Beijing would set the pace of change.
Washington and other trading partners complain China’s yuan is undervalued, giving its exporters an unfair advantage and swelling its multibillion-dollar trade surplus. The yuan has been frozen against the dollar since late 2008 to help Chinese exporters compete amid weak global demand.
Beijing’s envoys pressed a range of Chinese interests, calling for an end to U.S. curbs on “dual use” high-tech exports with possible military applications. They urged Washington to simplify foreign investment rules that they complained hurt Chinese companies.
The two governments agreed to collaborate on developing China’s natural gas resources.
“We believe that could well lead to new economic opportunities in both countries and a lower carbon output level,” Clinton said.
The meeting, which brought dozens of U.S. cabinet officials to Beijing, was overshadowed by tensions over the sinking of a South Korean warship, which Seoul blamed on the rival north.
U.S. Treasury Secretary Timothy Geithner, the top U.S. economic envoy to the talks, said the two sides agreed to cooperate through the International Monetary Fund to help resolve the European debt crisis.
Earlier Tuesday, Geithner appeared at a school for future Communist Party leaders and said Washington is getting its deficits under control.
Geithner told students at the Central Party School the United States has learned from the crisis and is improving regulation. He said Washington was moving forcefully to cut its swollen budget deficit — a key worry for Beijing, the biggest foreign investor in U.S. government debt.
The talks brought dozens of U.S. officials led by Geithner and Clinton to Beijing. Begun last year in Washington, the dialogue is aimed at easing trade strains and promoting cooperation on issues from financial markets to clean energy research.
“The basic strategy is to make sure that our economy is growing, then institute long-term reforms and restore the basic discipline to the budget process that we abandoned in the previous decade,” Geithner said.
The party school is a mid-career training center for rising officials from provincial governments. Geithner’s visit was billed as a chance for Washington to reach beyond Beijing and address a future generation of communist leaders.
Geithner called on China to keep technology markets open, saying competition would promote innovation. Washington and business groups are alarmed by Beijing’s “indigenous innovation” policy, meant to promote Chinese technology by favoring domestically developed products in government procurement and other areas.
Foreign companies say the policy is the biggest threat to their access to Chinese markets and Geithner said he would raise the issue at the dialogue.
