U.S. and China sign pacts but not on strategic issues

BEIJING - U.S. and Chinese officials signed accords on trade finance, China's gas reserves, and credit arrangements Tuesday but gave no indication of any progress on vital strategic issues involving the rising tensions on the Korean peninsula and the value of China's currency.

The U.S. and Chinese delegations said the two days of high-level talks had been substantive.

Also left unresolved, at least in public, was whether China would continue to support a draft plan for new sanctions against Iran in the U.N. Security Council, where China has a veto. Washington views the sanctions as a key move toward discouraging an Iranian nuclear-weapons program.

Finally, there was the issue of China's undervalued currency. Will Beijing allow the yuan to appreciate, and if so, when and by how much? The relatively low exchange rate of the yuan to the dollar, kept at about 6.8 by the government, has led to global trade imbalances, many economists contend.

Both sides at the meetings, called the Strategic and Economic Dialogue, said that all those matters were being discussed in great detail. While the Americans and Chinese acknowledged that they hadn't agreed on everything - at times not even "the perception of the issue," Secretary of State Hillary Rodham Clinton said - officials took great pains to say the fact that the conversations had taken place was a sign of progress.

At the end of the day, however, it wasn't clear what, if anything, the talks had accomplished.

Chinese leaders have remained vague, in public at least, about what steps they might or might not take on the crucial issues. State Councillor Dai Bingguo spoke in his closing remarks Tuesday of developing a "mutually beneficial and win-win relationship." On Korea, though, he gave only the official line that Beijing hopes that all concerned will "calmly and appropriately handle the issue."

President Hu Jintao was vague on the question of China's currency in his remarks Monday. "China will continue to steadily advance the reform of the . . . exchange rate under the principle of independent decision-making, controllability, and gradual progress."

Washington pledged help, including from the U.S. Geological Survey, to develop China's resources of clean-burning shale gas.

"We believe that could well lead to new economic opportunities in both countries and a lower carbon-output level," Clinton said.

Treasury Secretary Timothy Geithner said Tuesday that he welcomed the fact that China's leaders "have recognized that reform of the exchange-rate mechanism is an important part of their broader reform agenda," but it wasn't clear whether he was prodding the Chinese, reporting progress, or perhaps still trying to figure it out himself.

He added: "This is, of course, China's choice."

Also Tuesday, Geithner appeared at a school for future Communist Party leaders and said Washington was cutting its budget deficit - a key worry for Beijing, the biggest foreign investor in U.S. government debt.

"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 at the Central Party School.

Geithner's visit to the school, a midcareer training center for rising officials from provincial governments, was billed as a chance for Washington to reach beyond Beijing and address a future generation of Communist leaders.