The Chinese currency appreciated slightly against the US dollar during New York following a pivotal meeting involving the country’s vice president, Xi Jinping and US President Barack Obama.  Nondeliverable forwards on Chinese yuan, rose to trade at 6.2998 against the US dollar.

Arriving in Washington for a series of meetings with US politicians and business leaders, the  upcoming leader of the Chinese nation voiced his opinions regarding several sticking points in current China-US trade relations.  Initially focusing on China-Taiwan relations, Vice President Xi Jinping stated that the US “should abide by the one-China policy and take concrete actions to oppose Taiwanese independence.”  Xi added that US officials would do well to respect current bilateral trade relations by additionally recognizing that “Tibet is part of China”.  The comments were made in attempts to address efforts by Obama’s administration in 2010 to go ahead with arms sales with the Taiwanese government.  The situation became highly volatile as Chinese officials outwardly criticized US policymakers – ultimately threatening the world’s largest economy with global sanctions.

However, President Obama – unwavering in his own right – countered Xi’s comments, noting that he is unable to stand by and watch as competitors of US companies decide to not “play by the rules.”  US politicians continue to see the Chinese currency as being widely undervalued – lending a competitive advantage to Chinese made goods around the world.  Although Chinese officials have said that recent reforms have helped boost Chinese imports of US made goods to the tune of $100 billion, US officials still note the comparative advantage when it comes to the US trade deficit.  With China, the US trade deficit skyrocketed to a record $295.5 billion last year.

The back and forth of today’s meeting is enough indication that trade relations between the two superpowers is unlikely to change anytime soon.  With neither country backing down from the other, the string of meetings – which has Xi flying to the midwest and west coast of the US this week – is unlikely to produce any good will towards 2013, when Xi is expected to take office.  All in all, this will leave the Chinese yuan appreciating slowly against the US dollar, for now.

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