US urges China to address food safety, speed yuan rise

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Nov 14: China must ensure the safety of food exports and allow the yuan to appreciate faster to avoid a backlash and smooth the country’s integration into the global economy, the US Treasury Department’s top China negotiator said.

“A major risk China faces is that its government won’t act quickly enough to take the policy steps necessary to deal with the economic and social imbalances created by its growth model,’’ said Alan Holmer, the Treasury’s special envoy to China, in the text of a speech at Qinghua University in Beijing.

The image of Chinese-made products has been tarnished amid revelations this year of toxic pet food, contaminated vitamins and deadly cribs. The US last week recalled a Chinese-made toy containing an industrial chemical linked to a so-called “date rape’’ drug. China on Nov. 10 halted exports of the toy.

“Recent and repeated reports of tainted food and product imports are causing fear and uncertainty in American consumers and harming the ‘Made in China’ brand in the United States,’’ Holmer said in the speech.

He reiterated Treasury Secretary Henry Paulson’s position that it is in China’s interest to have a stronger currency. Paulson, who will visit China next month for the fifth time since taking office in July 2006, has pushed the Beijing government to be less reliant on exports and more energy efficient.

“Bold structural policies are needed to shift China’s growth away from heavy industry, high energy use, capital intensiveness, and dependence on exports,’’ Holmer said.

“To enable market forces to efficiently rebalance the economy and spread prosperity to all the Chinese, China needs more flexible prices, including a much more flexible, market-driven exchange rate.’’

China’s economy is likely to expand more than 11% this year, the People’s Bank of China said last week, and the country’s record trade surpluses are flooding the financial system with cash, spurring inflation.

The yuan has gained more than 11% versus the dollar since a fixed exchange rate ended in July 2005, a pace Chinese officials contend is sufficient.

People’s Bank of China Deputy Governor Wu Xiaoling said last month that the government won’t hurry to alter its currency system because doing so may hurt the economy.