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Business

Geithner in China for top-level talks on yuan

Video by FRANCE 24

Text by News Wires

Latest update : 2010-04-08

US Treasury Secretary Timothy Geithner held talks in Beijing on economic ties amid signs China is open to calls for a more flexible yuan. The visit came days before Chinese President Hu Jintao heads to Washington for a nuclear security summit.

AFP - US Treasury Secretary Timothy Geithner held talks in Beijing on economic ties amid signs China may be ready to act on calls for a more flexible yuan.
  
The last-minute visit on Thursday came just days before Chinese President Hu Jintao heads to Washington for an international summit on nuclear security -- suggesting the two countries are getting their relationship back on track.
  
The United States and China's other key trading partners have been piling pressure on Beijing to allow the yuan to appreciate, saying it is undervalued and gives the Asian nation an unfair advantage by making its exports cheaper.
  
Geithner -- who started the day in Hong Kong -- met in Beijing with Vice Premier Wang Qishan, the cabinet official in charge of economic and financial issues.
  
"The two sides exchanged views on US-China economic relations, the global economic situation and issues relating to the upcoming economic track dialogue of the second US-China Strategic and Economic Dialogue, to be held in Beijing in late May," the US Treasury Department said in a statement.
  
The department later confirmed Geithner left Beijing after the 75-minute meeting and was expected back in Washington Friday.
  
Wang also heads the Chinese side for the Strategic and Economic Dialogue with the US.
  
Neither US nor Chinese officials would comment on the agenda for the talks.
  
The Chinese currency has been effectively pegged at 6.8 to the dollar since mid-2008, and US lawmakers have been pushing the US Treasury to label China a "currency manipulator" -- a move that would open the door to sanctions.
  
Democratic and Republican lawmakers accuse China of deliberately undervaluing the yuan, leading to a flood of inexpensive goods and contributing to a trade deficit that soared to nearly 227 billion dollars in 2009.
  
But the US Treasury at the weekend announced the delay of a report which had been expected in mid-April that could have slapped China with the "manipulator" tag, with Geithner saying there were better ways to advance US interests.
  
Analysts have said Beijing appears ready to shift its position -- and Geithner's impromptu trip could be further evidence of efforts to reach a compromise on the thorny issue.
  
"China definitely needs to make a change and avoid becoming a common enemy of the entire world," Chen Xingdong, an economist at BNP Paribas in Beijing, told AFP.
  
"I don't think it will give in too much, but it will do as much as it can afford."
  
Researchers at Citigroup said they expect an appreciation of the yuan in the second quarter -- meaning before end-June -- calling a widening of the narrow daily trading band "likely".
  
Last month, central bank governor Zhou Xiaochuan said that Beijing's currency policy was temporary and would be withdrawn "sooner or later" along with other anti-crisis measures.
  
Then this week, Ba Shusong, an economist working for the cabinet's think tank, said a widening of the band was a policy possibility, adding the timing of a shift depended on the pace of economic recovery in China and the US.
  
Chinese foreign ministry spokeswoman Jiang Yu added that Beijing would continue to adapt its exchange rate regime in a "proactive and gradual manner" but rejected the idea that it was to blame for any Sino-US trade imbalance.
  
Geithner said Tuesday the decision to revalue the yuan was "China's choice".
  
But he told India's NDTV network he was "confident that China will decide it is in their interest to resume the move to a more flexible exchange rate that they began some years ago and suspended in the midst of the financial crisis".
  
Hu is due to visit Washington on April 12-13 -- just days before the US Treasury report was to have been issued -- prompting speculation that a deal was reached to ensure a smooth visit.
  
Hu and President Barack Obama will meet on the sidelines of the summit, probably on Monday, the White House said.
  
Those discussions are likely to touch on a host of issues dogging Sino-US ties -- including Taiwan, Tibet, Internet freedom and the value of the yuan.

Date created : 2010-04-08

  • ECONOMY

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