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Economy and Diplomacy Discussed In Sino-US Talks

This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.

A big hello to our viewers across China. I'm Saijal Patel and you're watching "Asia Market Daily".

The latest round of official talks between the U.S. and China are under way in Washington.

As the name suggests, the annual Strategic and Economic Dialogue deals with two areas: Economic matters and diplomatic issues.

The talks got off to a contentious start - with the two sides openly disagreeing, yet again, on a few key issues - namely Washington pushing hard on China's human rights record and its currency peg.

While Beijing hinted at misgivings over U.S. fiscal policy.

However, according to David Riedel of Riedel Research Group, the U.S. needs to lay off China, when it comes to the issue of Yuan appreciation.

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David Riedel, President & Founder of Riedel Research Group:
The Chinese are sick of hearing economic advice from the United States, which makes some sense at this juncture, and I think the Chinese have decided they want to do the currency at their pace, at their timing, on their schedule. And I think that the U.S does itself a disservice quite honestly by continually bringing up this point. The Chinese will do this on their own schedule, on their own time. They cannot do it suddenly, they cannot do it sharply. there's too much at stake. And so I think the U.S. actually be better served by laying off this for a while, but that's not going to happen going into a campaign season as we are now.

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The Euro remained under pressure in Asian trade, dragged down by new concerns about Greece.

Standard & Poor's has downgraded the nation's credit rating to B, on the back of concerns that debt restructuring is increasingly likely. That's just one notch above Pakistan.

Now, Moody's is also threatening to slash Athens' ratings by several notches.

CNBC's Silvia Wadhwa has more on the debt threat.

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Silvia Wadhwa, CNBC:
So far we're all still waiting how the Greek situation is going to develop. Over the weekend of course there was a lot of debate, lot of headlines about did the Greeks threaten to leave the Euro, is an exit of the Euro on the cards, is it even feasible. It's being completely ruled out by everyone on board, by the politicians, by the ECB, by the Greeks themselves, they say it's absolute nonsense, it's not very helpful, it wouldn't be helpful if we did that, hence, lets talk about reality; let's talk about what we can really do. Of course they haven't talked an awful lot about what they can really do, but what's the likely scenario with the new, with the IMF, the EU, and the ECB, basically getting the progress report from the Greek government. What's the likely scenario is not a real straight forward restructuring because the politicians whether they are in Berlin, in Paris, in Brussels, or here in Athens don't really want that. What's the likely scenario is that we are going to get some kind of restructuring light. With the stretching of maturities, with taking Greece out of the capital market for a longer period of time; and essentially still playing some kind of waiting game, to get beyond that magical deadline, beyond the 2013, after that - all the cards will be mixed in EU; after that we could see higher cards, after that we could see anything else, but of course, whether politicians will get through with this kind of plan, that's a different question.

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Speaking of downgrades...

Standard & Poor's says the number of potential downgrades rose in April, for the first time in 2 years - after the agency lowered its outlooks on the U.S. and Japan.

Last month, S&P cut its outlook on U.S. debt - warning its fiscal profile may become weaker if policy makers can't tame the budget deficit.

But speaking to CNBC, the IMF's John Lipsky says he's optimistic American lawmakers will get their act together.

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John Lipsky, First Managing Director at IMF:
There will have to be medium term adjustment of what they call the entitlement programs. Everybody knows it's going to happen, but it doesn't have to happen tomorrow. But what's important is to create confidence the U.S. will be on a sustainable medium term path.

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That's the latest "Asia Market Daily". I'm Saijal Patel from CNBC, thanks for watching.

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