US Treasury Secretary John Snow told a congressional committee Wednesday that Washington is intensively engaged with China to promote a more balance foreign trade.
In an appearance before the House Financial Services Committee, Snow was repeatedly asked what he is doing to reduce China's huge trade surplus with the United States.
Last week, Snow declined to designate China a currency manipulator, an action he told lawmakers might have made China more reluctant to allow the yuan to rise. The yuan has risen slightly in recent days, trading below eight to the dollar for the first time.
Snow said President Hu Jintao, during his visit to Washington last month, committed China to measures that will reduce the trade imbalance.
"They are now committed to reducing their trade surplus with us and with the world, to developing their domestic consumption market, reducing focus on exports. And it is in their own self interest to do it," said John Snow.
Some lawmakers expressed concern that China is using the dollars it is accumulating to buy large quantities of US government bonds. Those holdings now exceed $300 billion. Snow said there was no need for concern. He said the purchases are a vote of confidence in US capital markets.
"Despite this increase in holdings, they are still a relatively small part of the US treasury securities, about 7.5 percent, something like that," he said. "And an even smaller percentage of the entire US capital market."
Snow said the United States and China play a critical role in each others and the world economy. The United States is China's biggest export market and China is the third largest importer into the United States.