U.S.’s Geithner praises China commitment on currency reform

* Geithner says yuan reform “of course is China’s choice”

* Says China to lower investment barriers in key sectors

* Confident Europe can manage fallout from debt crisis

By Glenn Somerville

BEIJING, May 25, (BestGrowthStock) – U.S. Treasury Secretary Timothy
Geithner on Tuesday welcomed a pledge by China’s top leaders to
pursue currency reform as part of a broader agenda aimed at
boosting domestic consumption and helping rebalance global growth.

In a statement at the close of a two-day Strategic and
Economic Dialogue, Geithner said letting markets have more sway
on currency values will benefit China by giving it more tools to
keep inflation contained.

He also cited progress in persuading Beijing to let U.S.
firms compete more equally in Chinese markets.

He said the discussions with Chinese leaders on the yuan were
encouraging but wouldn’t speculate when Beijing might let its
yuan rise in value as American lawmakers are demanding it do.

“This is of course China’s choice,” he said in the statement.

In a round of television interviews, Geithner was asked how
he interpreted remarks Chinese President Hu Jintao’s remarks on
Monday that it will continue exchange rate reform at its own pace.

“Encouraging, promising,” Geithner said on Bloomberg
Television. “”But again, I’m going to leave it to them to
characterize what their plans are.”

U.S. politicians and some business groups maintain that
China keeps its yuan at an artificially low level that gives its
products an unfair price advantage in America’s consumer markets.

The yuan had risen about 21 percent between 2005 and mid-2008
when Beijing repegged it to try to add stability during the
turmoil stemming from the global financial crisis.

Geithner said he was “as confident as I’ve ever been” that
China will see that it is in its own interest to let the yuan,
also called the renminbi, resume appreciating.

Throughout his visit to China, Geithner has stressed that a
recovery in the United States and elsewhere has been gathering
steam, indirectly suggesting that China no longer had as strong
of a case for maintaining the currency peg.

Asked about U.S. objections to Chinese industrial policies
aimed at promoting domestic high-tech leaders, Geithner said he
was hopeful that Beijing would be “sensitive and responsive” to
concerns that its so-called “indigenous innovation” policies
might discriminate against U.S. companies.

“But let me just say American companies are doing very well
in China. What they’re concerned about is to make sure that going
forward, they’re going to compete on a level playing field,” he
said.

Geithner heads for Britain and Germany on Tuesday night,
where he will discuss European efforts to stabilize its financial
markets in the wake of a debt crisis that has made investors edgy
about the region and driven down the euro’s value.

“I’m completely certain that Europe has the ability to manage
this,” Geithner said. The European Union has agreed on a
trillion-dollar package to deal with financial strains in the
region if necessary and, in conjunction with the International
Monetary Fund, put together a bailout package for financially
strapped Greece.

In an interview with Fox Business Network, he said that what
was necessary now was to put the support measures in place.

“The most important thing is that Europe act with force and
care and speed…,” Geithner said.

He repeated, as he had earlier to a group of middle-aged
students at a school that trains future regional leaders, that
the Obama administration is committed to lower record budget
deficits — though only after it is certain economic recovery is
assured.

“It’s critically important to the United States, important to
the strength of recovery and to future U.S. growth, that we act
to bring our deficits down quickly and substantially as the
economy strengthens, ” he said.

Geithner meets Britain’s new Chancellor of the Exchequer,
George Osborne, in London on Wednesday and then travels on to
Frankfurt to meet European Central Bank President Jean-Claude
Trichet. On Thursday, he flies to Berlin for a meeting with
German Finance Minister Wolfgang Schaeuble before returning to
Washington.

Investing Analysis

(Additional reporting by Doug Palmer; Editing by Ken Wills)

U.S.’s Geithner praises China commitment on currency reform