Currency Stalemate at U.S.-China Meeting

As the yuan begins to depreciate against the dollar, Henry Paulson meets with Chinese leaders to encourage continued currency reforms
US Treasury Secretary Henry Paulson (L) meets with Chinese President Hu Jintao during a meeting at the Great Hall of the People on December 5, 2008 in Beijing, China. Pool/Getty Images

Once China de-pegged the yuan from the U.S. dollar on July 21, 2005, the exchange rate issue faded as a major irritant in U.S.-Sino relations. Since then, the yuan, also known as the renminbi or "people's money," has gradually strengthened by more than 20%, to its present level of 6.88 against the greenback. The stronger yuan, along with rising labor costs in China and the cancellation of preferential policies for Chinese exporters, have been pushing factories in the Pearl River Delta (BusinessWeek.com, 3/27/08) region into bankruptcy or overseas to Vietnam, Indonesia, or other emerging markets.

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