Geithner Urges China to Accelerate Economic Reforms

Posted May 3rd, 2012 at 3:45 am (UTC-5)
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U.S. Treasury Secretary Timothy Geithner on Thursday urged China to let the value of its tightly-controlled currency rise, as top diplomats from both countries gathered in Beijing for annual talks on economic and security issues.

Geithner's comments came at the start of the two-day U.S.-China Strategic Dialogue, which has been overshadowed by a diplomatic dispute over a Chinese activist seeking U.S. protection. Neither side directly mentioned the case in opening remarks at the dialogue.

Instead, Geithner called on China to speed up its economic reforms. He acknowledged that China has allowed its yuan currency to gain about 13 percent against the U.S. dollar over the past two years. But he said more gains were in the long-term interest of both the U.S. and China.

The U.S. has long accused China of intervening in currency markets to push down the value of the yuan. A lower value means Chinese-made goods are cheaper for foreign buyers, boosting China's exports.

Stephen Schwartz, chief economist for Asia at the Hong Kong-based Banco Bilbao Vizcaya, says the yuan has risen in value against the dollar in the past year. But he told VOA that most analysts still see some room for further appreciation.

“The case for a substantial appreciation is getting harder to make because of the substantial, real effect of appreciation that occurred last year, as well as substantial narrowing of China's trade and current account balance in 2011. Yet we, and I think most, analysts still see some modest room for further appreciation. But less room than there was a year ago.”

Geithner's counterpart, Vice Premier Wang Qishan, defended China's monetary policy, saying Beijing is moving gradually to make its currency more flexible. He urged Washington not to “politicize” economic issues.

Wang also called on the U.S. to take steps to relax controls on high-tech exports, expand infrastructure cooperation, and increase financial market access.

The dialogue comes amid controversy surrounding blind Chinese dissident Chen Guangcheng. Chinese President Hu Jintao said in his opening remarks at the dialogue that Washington and Beijing should not let disagreements over certain issues negatively affect overall U.S.-China relations.

“Both sides must learn to respect each other, grasp the common ground and make the cake of common interest bigger, treat differences appropriately, respect and care for each other's concerns, properly resolve existing disputes through dialogue and communication and strengthen mutual understanding to avoid impacting the overall state of the Sino-U.S. relationship.”

In her opening comments, U.S. Secretary of State Hillary Clinton called on China to protect human rights.

U.S. officials had hoped the dialogue would be an opportunity to highlight areas of common interest between the two countries. Washington is also seeking Beijing's support in defusing tension Iran, North Korea, and Syria.