US Secretary of the Treasury Timothy Geithner held talks with his Chinese counterpart yesterday on economic ties, likely touching on the thorny issue of China’s currency, which Washington believes is undervalued.
Geithner met Chinese Vice Premier Wang Qishan (王歧山) in Qingdao a day after a G20 finance ministers meeting wrapped up in South Korea, a US official said.
“The two sides exchanged views on US-China economic relations and the preparation for the [G20] leaders summit in Seoul,” a statement released by the US embassy said following the talks.
US President Barack Obama is likely to meet Chinese President Hu Jintao (胡錦濤) on the sidelines of the summit in Seoul from Nov. 11 to Nov. 12. Obama is scheduled to attend the meeting, but Hu’s attendance has not been officially announced.
US officials refused to detail the specifics of the Geithner-Wang talks, but they likely included the yuan, which Washington believes is being kept grossly undervalued in order to help Chinese exporters.
China counters that irresponsibly loose US monetary policy is driving down the dollar and causing a wave of capital to flood emerging markets in search of higher yields.
Geithner said in a statement on Saturday that the G20 meeting agreed that a “gradual appreciation” in the currencies of major trade-surplus nations was required.
“Countries with significantly undervalued exchange rates committed to move toward more market-determined exchange-rate systems that reflect economic fundamentals, as China is now doing,” Geithner said in a statement.
However, further efforts to stabilize international economic imbalances were necessary if the recovery from the global financial crisis was going to be successful, he added.
“This requires a shift in growth strategies by countries that have traditionally run large trade and current account surpluses, away from export dependence and toward stronger domestic demand-led growth,” Geithner said. “This entails a range of policy changes, as you can see in the very broad range of domestic reforms being undertaken by China.”
Geithner was scheduled to -return to the US yesterday following his talks with Wang.
Last week, China announced that Hu would visit the US in January, as the world’s top two economies seek a way to sort through a host of disputes.
Beijing has bristled at criticism from Washington about the value of the yuan, which some US lawmakers have charged is undervalued by as much as 40 percent, giving Chinese exporters an unfair trade advantage. The US trade deficit with China ballooned to a new record in August, sharply widening the overall trade gap, according to official US data released this month.
The two sides are also at odds over a series of trade disputes and human rights issues, such as the case of jailed dissident Liu Xiaobo (劉曉波), who was awarded this year’s Nobel Peace Prize, sparking Beijing’s anger and winning Washington’s praise.
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