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Coming back empty-handed

Ruth Kirchner Dec 15, 2006

KAI RYSSDAL: It wasn’t just Fed Chairman Ben Bernanke that Henry Paulson took to China with him. A third of the whole Cabinet was there in theory to set the stage for more economic discussions but in reality to get the Chinese to ease up on their currency. The delegation batted about .500 with some fancy political footwork by Mr. Bernanke thrown in for good measure. Ruth Kirchner reports now from Beijing.

RUTH KIRCHNER: After two days of talk, Treasury Secretary Henry Paulson told a news conference he and his high powered team got some tangible results. He said China agreed to let the New York Stock Exchange and NASDAQ open offices in Beijing. But on what he described as the core issue, China’s currency regime, there was little progress. Paulson put on a brave face.

HENRY PAULSON: We had a very good discussion on that and an unusually good interchange of ideas.

Earlier in the day, Fed Chairman Ben Bernanke spoke at a leading think tank. He had plans to do some talking on the currency. In his prepared remarks, he called the undervalued yuan a subsidy for Chinese companies. But in his actual speech, he softened the wording:

BEN BERNANKE: Greater scope for market forces to determine the value of the RNB would also reduce an important distortion in the Chinese economy, namely the incentive for Chinese firms to focus on exporting rather than producing for the domestic market.

But none of that broke the ice with the Chinese. Officials only said they would look into a possible reform and declined to make any firm commitments. Secretary Paulson said they hadn’t expected any concrete steps anyhow.

HENRY PAULSON: If you want immediate results, then it’s not realistic or it’s going to be relatively modest things. We’re tackling some of the very biggest issues.

The next round of the economic dialogue will take place in Washington in May. In Beijing, I’m Ruth Kirchner for Marketplace.

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