At Economic Pow-wow, China Tells US to Get Economy in Order (Updated)

China and the U.S. launched the fifth round of the so-called Strategic Economic Dialogue as an effort to find common ground amidst a global economic crisis. It was attended by outgoing U.S. treasury secretary Henry Paulson and Chinese Vice Premier Wang Qishan. Reuters reports:

In a closing statement after the fifth round of the cabinet-level Sino-American “Strategic Economic Dialogue,” Paulson welcomed recent steps by Beijing to boost home-grown demand.

“As in the past, we discussed the importance of domestic-led growth, and the importance of a market-determined currency in promoting balanced growth in China that will contribute to a healthy global economy,” Paulson said.

He said the export-import banks of both countries had made an additional $20 billion for trade finance available, particularly for creditworthy importers in developing economies.

AP is reporting that Chinese officials lay out conditions that they want to see their U.S. counterparts meet:

in unusually pointed language, China’s central bank governor, Zhou Xiaochuan, blamed the crisis on U.S. financial excesses and said they should be fixed.

“The important reasons for the U.S. financial crisis include excessive consumption and high leverage,” Zhou said in a speech to the meeting, according to Jin Qi, a central bank official who briefed reporters. “The United States should speed up domestic adjustment, raise its savings rate and reduce its trade and fiscal deficits.”

The two-day meeting was not expected to produce breakthroughs on trade or other sensitive issues. The two sides signed a pact Thursday to cooperate in financing for projects to improve energy efficiency and were due to work Friday on an investment treaty.

See also a Xinhua page dedicated to the meetings and a report from USA Today: “Chinese Blame U.S. Policies for Financial Crisis During Economic Talks.” It is not yet known if the dialogue will continue under the incoming Obama administration.

Update: Read “A Mixed Ending for Paulson in China” from the Wall Street Journal:

Back in 2006 the SED was more about the U.S. educating China in the ways of a free market economy — while pressing its concerns on China’s currency regime, intellectual property rights and market access for American businesses.

Before the latest round, which concluded Friday, Mr. Paulson himself admitted the teacher has some severe problems of its own. This week, he’s had to take Chinese criticisms on the chin.

The head of China’s sovereign wealth fund says he’s lost the confidence to invest in U.S. banks, while China’s central bank governor Zhou Xiaochuan didn’t even stay in town. Instead, he flew to an international meeting chaired by Mr. Paulson’s intended successor, Timothy Geithner.