U.S. Treasury Secretary Henry Paulson on Thursday told lawmakers that the U.S. is pressing for faster action by China to move to a flexible yuan, and is seeking benchmarks for actions to open China's economy to more U.S. goods and services.
"We are pressing for much greater flexibility and movement in their currency in the short term and they've been moving it more quickly, but it's not nearly quickly enough," Paulson told lawmakers on the Senate Budget Committee.
The Treasury secretary, who wrapped up three days of testimony on President George W. Bush's fiscal 2008 budget proposal, said that reducing large trade imbalances with China will require structural changes, such as more openness to foreign competition and growth in domestic consumption.
"We're working on, again, some benchmarks and working toward progress on the kinds of intermediate term and longer term structural change we need to make to really open up their economy," Paulson said. "To the extent they open up for more competition for U.S. products more competition in the services area and get some structural changes, that will make a big difference."
Members in both houses of Congress have expressed frustration with the massive U.S. trade deficit with China and associated job losses in the U.S. manufacturing states -- a phenomenon they say is due in part to an artificially low valuation of the yuan to the dollar.
Paulson said his strategic economic dialogue, under which top cabinet-level U.S. and Chinese officials discuss economic imbalances, was a positive step. "We have a process in place. I do believe the strategic economic dialogue lets us speak with one voice on a regular basis to the decision makers of China," he said.
Paulson reiterated comments earlier this week that U.S. exports to China had reached a "crossover point" where they were starting to grow at a faster rate than imports from China.