Ahead of Chinese president's visit, U.S. and China trade criticism on economic issues
U.S. Treasury Secretary Timothy Geithner walks to a basketball court prior to playing basketball with students in Beijing in May 2010. (Photo Credit: Nelson Ching/Bloomberg)
With Chinese President Hu Jintao's state visit with President Obama less than a week away, officials from both countries have been making carefully crafted remarks apparently intended to put pressure on the other side.
So far, the comments have avoided sensitive topics such as the military tension on the Korean Peninsula and human rights, which are usually discussed behind closed doors, and have focused mostly on economic issues.
The "debate" began on Wednesday when Treasury Secretary Timothy F. Geithner, speaking at Johns Hopkins School of Advanced International Studies in Washington, said that the undervaluation of the renminbi, also known as the yuan, "is not a tenable policy for China or for the world economy." The Washington Post's Brady Dennis reported that "despite the firm words on China's currency policies, Geithner offered a largely diplomatic assessment of economic relations between the two countries. He mentioned the debate that is unfolding within China about the pace of economic reforms, and he said that despite American concerns over currency issues, China's explosive economy creates enormous opportunities for the United States."
"We believe it is in China's interest to allow the currency to appreciate more rapidly in response to market forces. And we believe China will do so because the alternative will be too costly - both for China and for China's relations with the rest of the world."
U.S. Commerce Secretary Gary Locke said in a speech Thursday at a meeting of the U.S.-China Business Council that China's trade policy and its lax adherence to intellectual property laws is threatening global stability, The Washington Post's Michael Birnbaum reported. Locke noted China's growth in the world economy and its increasing openness over the last 20 years, but said that old policies of protecting domestic industries would no longer suffice.
"The gross trade imbalances between our countries... threaten global stability and prosperity"... "China's lax intellectual property protection and enforcement" and government decisions that lack transparency discourage foreign investment in the country. China and the United States should "pursue cooperation over confrontation in the economic sphere."
Chinese Vice-Foreign Minister Cui Tiankai, at a press conference in Beijing Wednesday, shifted worries about economic policies to Washington, saying that China wants "Washington to assure the security of its financial assets in the country," according to a summary of his remarks in the state-run People's Daily. China is the largest foreign holder of U.S. debt; as of October it held $907 billion of U.S. Treasuries, according to U.S. figures.
"Regarding the security of China's assets in the U.S., if the U.S. side can offer a positive statement on that then of course we'd welcome that. It's an issue we're paying attention to."
Chinese Foreign Ministry Spokesman Hong Lei, speaking at a news conference in Beijing Thursday, indirectly responded to Geithner by saying that revaluing the yuan will not solve the trade deficit with the U.S. According to Bloomberg News:
Trade imbalances between China and the U.S. are caused by many factors, including the structure of global commerce and U.S. restrictions on technology exports to China, Hong said. "We are willing to work with the U.S. in a comprehensive way to consider implementing measures to solve the problem of the imbalances between China and the U.S."
Ariana Eunjung Cha
| January 13, 2011; 1:39 PM ET
Categories: China, U.S. Commerce Dept., U.S. Treasury
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