China tries to cool yuan dispute with U.S.

The announcement, along with conciliatory comments by China's commerce ministry, appeared aimed at cooling an increasingly rancorous dispute which has U.S. senators threatening to slap duties on Chinese products if Beijing does not allow the yuan to rise.

"Channels of communication between our two sides are open. All issues of concern to either side can be discussed through these channels," He Ning, head of the commerce ministry's North American division, told a media briefing.

But China gave no indication it was ready to abandon its commitment to a stable yuan exchange rate, and market expectations of appreciation remained muted.

He and other officials at the briefing stressed that the United States remains a key market for Chinese goods, and Beijing wants to douse risks of a backlash.

"Sending an official to Washington sends a signal that China wants to talk through these issues and doesn't want to escalate this conflict," said Wang Yong, a professor at Peking University who studies China-U.S. economic ties.

Fruitful discussion was possible only if Washington checked politics and emotions at the door, said He.

"This will make the whole situation more complex, imposing disturbance from outside on our normal channels of communication," said He.

Political pressure is certainly building. Many in Congress are demanding tough action if China resists appreciation, the U.S. Treasury will next month issue a key currency report and contention over policy towards China could be magnified by mid-term Congressional elections in November.

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