US to urge China to raise interest rates, exchange rate in upcoming talks

The US will urge China to raise interest rates when negotiators meet with their Chinese counterparts this week in Washington for the Strategic and Economic Dialogue between the two countries, Bloomberg reported. The US is pitching higher interest rates – and a higher exchange rate for the renminbi – as a move in China’s self-interest to help control soaring consumer inflation. China has raised interest rates four times since late last year and inflation is expected to begin slowing in the summer. The US also says a higher exchange rate would help resolve trade and investment imbalances, although Chinese officials retort that the record US budget deficit is also to blame. For its part, China plans to lobby the US to reduce restrictions on investment by its state-owned firms in US companies.