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China Fends Off Pressure From U.S., Claims Credit For Curbing Inflation

China's torrent of cheap exports has helped suppress inflation in the U.S., an official Chinese newspaper said Friday, as Beijing officials fended off U.S. pressure going into a second day of
economic talks.

"Without trade with China, since the 1990s the United States economy would never have experienced long-term inflation-free growth unprecedented in its history," said a commentary in the overseas edition of the People's Daily.

"The biggest benefit the U.S. has gained from China is a macro-economic setting of long-term inflation-free growth," wrote the author, a researcher for China's Ministry of Commerce.

A high-level U.S. delegation led by Treasury Secretary Henry Paulson is in Beijing for two days of talks ending today aimed at airing trade grievances and exploring long-term cooperation.

The People's Daily is the official paper of China's ruling Communist Party, and the commentary was the latest in a barrage of official Chinese statements directed at curbing U.S. ire over the widening U.S. trade deficit with China, set this year to pass last year's record $202 billion.

On Thursday, Paulson urged China to let market forces set the rate of the yuan in order to help avert a protectionist backlash over what many U.S. lawmakers and manufacturers claim are Beijing's artificially cheap currency and exports.

Chinese Vice-Premier Wu Yi responded that her country was a victim of "misunderstanding" about China's policies and economic realities.

Many economists believe that inexpensive consumer exports made in Chinese factories have helped quell wage pressures and inflation in the U.S.. The U.S. core consumer price index, which strips out food and energy costs, rose 0.1% in October from the previous month.

But Chinese officials also acknowledge entrenched problems with the country's model of economic growth. Xie Fuzhan, the National Bureau of Statistics chief, was quoted by the
Xinhua news agency on Friday as saying that China needs time to reshape its economy, including reliance on exports.

"The structural problems will be long-standing issues in the Chinese economy and can't be solved quickly in the short term," Xie was quoted as saying. The People's Daily commentary said China would not let the talks become a one-way street.

"Consultation is not one side raising its demands and the other side unconditionally accepting them in full. China also has many demands for the United States," it said.