UPDATE 2-Geithner: Beijing supportive of G20 rebalancing effort

* Geithner: Broad consensus on G20 rebalancing framework

* Smaller imbalances will curb volatility, protectionism

* Says China supportive, moving toward yuan convertibility

(Adds details, quotes, background)

By David Lawder

NEW DELHI, Nov. 8 (BestGrowthStock) – U.S. Treasury Secretary
Timothy Geithner on Monday said China is supportive of the Group
of 20’s framework for rebalancing the global economy, and he
expects broad consensus on it at a leaders’ summit this week.

Geithner, speaking in the Indian capital during a state
visit with President Barack Obama, earlier met with Indian
Finance Minister Pranab Mukherjee in part to discuss the G20

“I’m very confident that you’re going to see very strong
consensus on this basic framework because it meets the basic
tests and it’s better than the alternatives,” Geithner told an
audience of Indian business leaders.

“The Chinese are very supportive of it. It has a lot of
benefits to them.”

The run-up to week’s G20 summit has been overshadowed by
disagreements over moves by the U.S. Federal Reserve to print
extra money to buy $600 billion of government bonds over coming

Critics led by China and Germany argue more quantitative
easing could depress the dollar and cause a potentially
destabilising flow of money into emerging economies. Obama
defended the policy on Monday, suggesting it was growth-friendly
for both the United States and the whole world. [ID:nTOE6A7067]

Geithner reaffirmed a G20 plan to limit current account
surpluses and deficits does not contain numerical targets, which
he called economically unfeasible. Several countries had
objected to suggestions that such imbalances be limited to
around 4 percent of gross domestic product.

“What we have proposed is a framework which incorporates
early warning indicators of large surpluses or deficits which
can then be monitored,” Geithner said.

He said limiting current account imbalances was needed to
check excess volatility in financial markets and combat
protectionist pressures, adding that exchange rates were a key
part of the plan.


The U.S. Treasury chief said China was the early stages of
reforming its currency, a move that was “overwhelmingly in its
interests”, as well as those of its trading partners.

Washington blames Beijing for holding down the yuan at a
level it says is unfairly low, giving Chinese exporters a
pricing advantage that hurts U.S. jobs. Geithner has delayed the
delivery of a report on whether China manipulates its currency
until after the G20 summit in Seoul.

“It’s beginning to start to make the changes that will allow
for broader convertibility over time, but those are in a very
very early stage,” Geithner said of China.

Geithner said the United States would work hard to improve
its economic relationship with China.

A U.S. official in Delhi said that even with the currency
tensions between the United States and China, the two countries’
economic relationship was flourishing and producing a major
increase in U.S. exports to China.

A key reason for Obama’s trip to the region was to show the
importance of exports to the United States’ future growth, and
to underscore the need to boost growth around the world.

The U.S.-India relationship, the official said, does not
carry the same tensions as that with China.

Geithner on Monday praised India’s domestic-driven growth.
With stronger investment in infrastructure and financial
reforms, it was “perfectly achievable” for India to sustain an 8
percent to 9 percent annual growth rate for years to come.

But with strong growth in emerging economies and capital
inflows from slower-growth advanced economies, Geithner said
signs of broader inflation pressure were starting to appear in
emerging economies.

Geithner said there were signs the U.S. economy was
improving, and it could see stronger-than-expected growth rates
as it emerges from a period of slow growth rates. It could grow
twice as fast as Europe and Japan for a long time to come, he

On Wednesday, Geithner will travel to Abu Dhabi, to meet
with the crown prince, Sheikh Mohammed bin Zayed al-Nahayan, to
discuss efforts to cut off financing for terrorism, and then
travel to Singapore for meetings with government officials.

He will end up in Seoul on Thursday to join Obama for the
G20 summit.

(Additional reporting by Abhijit Neogy; Editing by Bryson
Hull, Tony Munroe, John Stonestreet)

UPDATE 2-Geithner: Beijing supportive of G20 rebalancing effort