April 7, 2010Geithner to meet with China's vice premier amid currency dispute
Treasury Secretary Timothy F. Geithner will hold talks with top Chinese officials Thursday in Beijing, the strongest signal yet that a compromise might be brokered over the sensitive issue of China's currency value.
Geithner, en route home from a trip to India in which he touted closer ties with one of China's main economic competitors, will meet with Chinese Vice Premier Wang Qishan in a session that was confirmed during Geithner's India visit.
Wang oversees economic policy and has been a key interlocutor with the United States over global economic issues.
No official agenda was provided for what would be a brief stopover. Treasury Department spokesman Andrew Williams said in a written statement that Geithner and Wang have been "working together to find an opportunity to meet in person for some time."
China and the United States have been addressing a list of disagreements in recent months over economic and other policies, prompting sometimes sharp exchanges between two countries whose relationship has become a pillar of the global economy.
One of the central issues: whether the value of China's renminbi currency will be allowed to float more freely on world exchange rates. The value of the renminbi is fixed at about 6.82 to the dollar, a rate analysts say might be as much as 40 percent below what it would be if the value of the currency was allowed to float freely. The peg keeps China's goods comparatively cheap on world markets -- a fact some argue is draining away U.S. manufacturing jobs and is detrimental as well to emerging economies, such as India.
The issue has been a focal point of U.S. lawmakers, businesses and labor groups. President Obama has said that a properly valued Chinese currency is needed to help "rebalance" the global economy so that developed nations can export more and buy less, and nations such as China can move away from an export-driven model of development and rely more on domestic spending to support their economies.
A rise in the value of the renminbi would increase the purchasing power of Chinese consumers and probably prompt China to begin importing more goods from other countries.
In recent days, however, there has been a renewed emphasis on dialogue and efforts to resolve the currency and other potential disputes without confrontation. Geithner said over the weekend he would delay an upcoming decision on whether to declare China a currency "manipulator" under U.S. law, a ruling that would have marked a turn toward more open pressure on China to revalue the renminbi.
Instead Geithner said he would rely on a series of upcoming talks -- both directly with China and during meetings of the G-20 group of economically influential countries -- to address the issue.
Obama and Chinese President Hu Jintao spoke by phone for more than an hour last week, and Hu has agreed to attend a summit on nuclear issues in Washington later this month.
Wang has been a key figure in developing China's economic policies. He negotiated closely with then-Treasury Secretary Henry M. Paulson Jr. over policies that allowed China's currency to rise about 21 percent between 2005 and 2008.
Following the economic downturn, however, the country reinstated a strict dollar peg in order to prop up its exporters. China's export companies represent a powerful political force, and many have argued against letting the renminbi rise.
Other China policymakers, however, including the head of the central bank, feel a gradual rise in the renminbi would be healthy for China's economy, encouraging consumers to spend more and helping control inflation.
AP
