BEIJING - Disagreements between China and the United States that once provoked fears of a trade war may be cooling down now after Friday's telephone conversation between Presidents Hu Jintao and Barack Obama.
The development came after China announced on Thursday Hu's plan to attend the Washington summit on global nuclear security scheduled later this month.
Politics aside, Hu told his US counterpart that the two countries should defuse economic strains through negotiation. Although neither leader reportedly mentioned revaluing the yuan, it is understood this was an underlying theme.
Commenting on the significance of the Hu-Obama discussions, analysts here said they saw a good chance Hu's scheduled US trip could pave the way for a workable solution to the yuan dispute.
While a degree of revaluation of the yuan is thought possible in the near term, any one-off revaluation, they said, would be neither affordable for China nor likely to translate into US gains in trade terms.
This echoed what was said by Li Daokui, a Tsinghua University professor and a central bank adviser - that a successful visit by Hu to Washington could open the door for an adjustment in China's yuan policy.
Chinese economists are worried that if China gives in to US pressure for appreciation of the yuan now, US politicians would start a new round of yuan-bashing around the US mid-term elections in September.
"We need to find the right time, but a one-off adjustment won't benefit either China or the United States," Li was quoted as saying by Reuters.
Ma Ming, an economist with the Beijing Institute of Technology, said as a more practical alternative to the yuan dispute, "China could agree to increase the purchase of US goods" during Hu's US trip. For the US, that would be a better result than just naming China a currency manipulator as many US congressmen want
Since July 2005, the yuan has appreciated by 21 percent against the dollar. However, after July 2008, it was effectively pegged to the greenback over fears any appreciation would impact badly on China's economy as it weathered the global financial crisis.
According to Liu Dongliang, senior currency analyst at China Merchants Bank, "It is hard for Chinese officials and commercial interests to bow to US pressure and agree to revaluing the yuan, although it is highly possible that the currency would resume its own appreciation process in the second quarter of the year."
Huo Jianguo, dean of the trade research institute affiliated to the Ministry of Commerce, told China Daily that he has noted "signals from the United States recently that people recognize it is useless to force China on the yuan".
The two countries share common interests and responsibilities on much broader issues, he said. "It is useless to force us to back down, especially on things related to our key interests."
After some 130 US congressmen demanded that the Obama administration label China a currency manipulator in mid-April, many high-level government officials from China, including Premier Wen Jiabao and Commerce Minister Chen Deming, have stated that China's foreign exchange management is not the fundamental cause of trade imbalances between China and the US. At the same time they have said China would increase imports from the US to address the imbalances.
Commenting on a report Friday by the American Chamber of Commerce in China on its alleged deteriorating business environment, Huo admitted that the foreign companies' complaints were understandable because there were "indeed some restrictions and ways of treatment that are not in line with China's commitment to the World Trade Organization".
However, he said the Chinese government was "mulling over the crafting out of more open and transparent policies to promote foreign direct investment". The problems facing foreign investors were "temporary" and would not hurt China-US business tie, he said.
Wang Zhile, director of the research center on transnational corporation under the Ministry of Commerce, also told China Daily that he remained optimistic about the prospects for improving China's business environment for foreign companies.
