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As longtime rivals come together in Beijing this week, who will call the shots this time?
The U.S. has been pressuring China for at least six years to stop pegging the yuan to the dollar, an issue expected to take a central role this week. China finally ended its decade-long lock in 2005 with a one-time revaluation and a floating, but strictly managed, exchange rate. A de facto dollar peg returned in 2008 with the onset of the global financial crisis and has not loosened since. The Obama administration argues, as did its predecessors, that an undervalued yuan gives China an unfair trade currency.
4. Major developments are rare
In the new era of dialogue, U.S.-China relations tend to move slowly, with lots of talking, negotiating and meetings. Major announcements are few and far between, and instead, change happens incrementally. The U.S.-China Strategic and Economic Dialogue (SED) that starts in Beijing on Monday is one more talk in the ongoing series of talks between the U.S. and Chinese governments, which appear to have cooled and possibly resolved issues where tension may have prevailed in years past.
5. China’s clout continues to grow
Past meetings of high-ranking officials from the two countries often morphed into the U.S. lecturing China on trade and other issues. The tables turned at the first SED meeting in Beijing last year, when China took over lecturing the U.S., telling America to get its financial house in order. Trade spats and issues of values aside, China still owns a large percentage of U.S. debt and is concerned about its investment. Although Beijing has sold some of its holdings this year and Japan replaced China as the single largest holder of U.S. debt, China-U.S. relations will not decline anytime soon.