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U.S.-China economy talks may favor Beijing

WASHINGTON -- Five years and one financial crisis since the United States and China commenced regular high-level economic talks, fast-growing Beijing might have the upper hand this week in the latest round of discussions between the world's two biggest economies.

China faces threats of penalties against goods shipped to its largest foreign market unless it does more to end what U.S. manufacturers say are unfair trade practices, including currency manipulation, that have cost American jobs.

At the same time, America's biggest foreign creditor wants assurances that its $1.2 trillion in U.S. Treasury holdings are safe despite uncertainty in Washington over how much money the U.S. can borrow to pay its bills. If Congress fails to increase that borrowing limit before August, that probably would send interest rates soaring and reduce the value of those Chinese investments.

While analysts don't foresee major breakthroughs at the talks Monday and Tuesday, China's expanding economic might will give it greater leverage now. "The focus has shifted to making methodical if slow progress," possibly reflecting a maturing relationship between the two nations, said Eswar Prasad, a China expert at Cornell University. -- AP

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