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SHANGHAI, Oct 12 (Agencies): US Treasury Secretary John Snow drummed home the message Wednesday that China's ad-hoc financial system needed greater reform if the world's fastest growing economy was to fulfil its great economic potential.
"It's clear again the potential for the financial sector to play a larger role in China's economy is enormous," Snow told reporters during a brief visit to the Shanghai Stock Exchange.
"To realise that potential, a number of reforms have to be adopted," Snow said, highlighting a larger role for foreign financial firms, corporate governance, and modernised financial products such as derivatives.
Snow, is touring China ahead of a key meeting in Beijing this weekend of the Group of 20 larger developing countries and rich nations.
While Snow has in the past praised China for its recent currency reform measures, his visit to China's economic hub of Shanghai and later Wednesday the southwestern city of Chengdu, is clearly aimed at ensuring China is pushing ahead with further promised reforms to the currency.
When Snow returns to Beijing Friday he and Federal Reserve chairman Alan Greenspan will also thrash out an agenda with senior Chinese officials including Finance Minister Jin Renqing and central bank governor Zhou Xiaochuan.
In advance of the trip, the Treasury postponed the release of a twice-yearly report on global currency policies that many in Congress say should label China a "manipulator" of its exchange rate -- opening up the threat of US sanctions.
Washington report says: US and Chinese trade negotiators could strike a deal this week that potentially would block tens of billions of dollars in China clothing exports to the United States through the end of 2008, industry officials and experts said yesterday.
In a sign the two sides are edging closer to a pact, US Trade Representative Rob Portman is prepared if needed to fly to Beijing to sign a deal, other industry sources said.
Portman is in Geneva for high-level world trade talks. A spokeswoman for the chief US negotiator declined to comment on his travel plans. She also would not say whether Washington expected to reach an agreement, but repeated Portman's statement that the United States would not sign a bad deal.
The United States and China made substantial progress toward a pact last month in Washington, after two unsuccessful earlier rounds, industry officials said.
Meanwhile, China and the United States began a sixth round of talks here Wednesday aimed at settling a drawn-out dispute on China's soaring textile exports amid industry doubts of success.
However, government officials have maintained a brave face since the last round of negotiations ended without agreement in Washington last month.
The Chinese delegation is headed by Lu Jianhua, chief of foreign trade at the commerce ministry, while the US team is led by special textile negotiator David Spooner.
Issues under discussion include quotas to be imposed on Chinese imports by the US, their duration, and what period they will be benchmarked against.
The two-day talks are aimed at a comprehensive agreement to regulate Chinese textile shipments which have soared since global quotas were scrapped on January 1.
Since then, the US has slapped what it calls "cumbersome" quotas on individual categories of Chinese textile exports in response to demands for action from the US textile industry.
Li Xin, analyst of Shanghai-based United Securities, said both sides were anxious to reach an agreement by the end of the year, but China was unlikely to accept a deal less favourable than one already reached with the European Union.
China and the EU averted a trade war in June when they agreed to limit the growth of 10 Chinese textile exports to 8.5-12.5 per cent until the end of 2007.
The Chinese industry has voiced pessimism that progress can be made, blaming Washington's hardline stance for the stalemate.
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