China adopted a conciliatory tone in talks with the US yesterday on the first leg of the two-day Strategic and Economic Dialogue, promising to boost domestic demand and maintaining an open consideration on exchange rate reform, Reuters reported. Representatives from both sides acknowledged that a higher valued renminbi was not the sole solution to reducing the US trade deficit with China, but President Hu Jintao did say that "China will continue to steadily push forward reform of the renminbi exchange-rate formation mechanism in a self-initiated, controllable and gradual manner." According to Zhou Xiaochuan, governor of the People’s Bank of China, the two sides "spent quite a bit of time discussing the European debt crisis." In the run up to the bilateral talks, Treasury Secretary Timothy Geithner highlighted the growing concerns of US industry over access to China’s markets, a subject that is likely to be much talked about over the remainder of the talks.
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