Sino-American summit stumbles over exchange-rate hurdles

THE United States and China pledged closer co-operation on financial regulation and energy in Beijing yesterday, but made no breakthroughs on currency exchange rates in high-level talks overshadowed by Korean tensions.

China agreed to modify a policy on technology development that Washington and others complain might hamper trade. China wants to promote its own technology by favouring domestic products in government procurement. US officials said they still have concerns, and the two sides will hold more talks.

The meeting produced no progress on China's currency controls, a key irritant in relations with Washington. Chinese president Hu Jintao had promised currency reforms earlier this week, but gave no time-frame and said that Beijing would set the pace of change.

Washington and other trading partners complain China's yuan is undervalued, giving its exporters an unfair advantage. The yuan has been frozen against the dollar since late 2008 to help Chinese manufacturers compete amid weak global demand.

The two governments, however, announced modest agreements to co-operate in banking and financial market regulation and development of alternative energy.