UPDATE 2-Geithner: global economy can handle Europe strains

* Global recovery makes it easier to deal with Europe

* U.S. dollar rising due to confidence in U.S. economy

* U.S. to tackle deficit issue seriously

(Adds details, background)

SHANGHAI, May 22 (BestGrowthStock) – U.S. Treasury Secretary Timothy
Geithner said a strengthened global economy is now in better
shape to handle the strains emanating from Europe’s crisis,
China’s Xinhua news agency reported on Saturday.

“You see some of the challenges in Europe now. But I think
we are in a much stronger position to manage those challenges,”
he told Xinhua in an interview in Washington before heading to
Beijing for high-level economic discussions.

Geithner also said the dollar was on the rise because
confidence was growing about the strength of the U.S. recovery.

The U.S. Treasury chief was due to arrive in Beijing on
Sunday for meetings of the Strategic and Economic Dialogue,
co-chairing the U.S. side with Secretary of State Hillary
Clinton.

The economic component of the Monday and Tuesday talks are
expected to explore ways to better balance the two countries’
$400-billion trade ties, steering clear of an open clash about
the yuan’s peg to the dollar.

The United States still has the world’s largest economy and
China has the fastest-growing one, so Geithner said cooperation
between the two was vital for healthy global growth.

“China and the United States are doing what we need to do to
help contribute to a broader global economic recovery,” he said.

The U.S. administration is going to tackle the deficit
situation very seriously, Geithner told Xinhua. As he tries to
reinvigorate the U.S. economy, President Barack Obama has set a
goal of doubling exports in five years, which can be met only
with a big increase in sales to China.

Geithner said both the U.S. and Chinese economies have
undergone a major transformation in recent years and struck a
theme that he is expected to pursue by praising rising levels of
domestic consumption in China.

The Obama administration has been urging China to rely less
on exports, and more on increased consumer spending at home, to
fuel its economic growth. Geithner also noted that the U.S.
economy’s expansion now was being led by investment and exports,
rather than consumer spending, and that savings were rising.

EUROPE CONCERN

Europe’s debt crisis has become an issue of concern, partly
for fear that it might spread to other regions but also because
it means a diminished market for exports from countries like
China.

That has led to speculation that Beijing will be less likely
to let its yuan currency rise in value, as the Obama
administration was urging, since the euro’s decline has made
Chinese products more expensive in its top export market.

A $1 trillion safety net, provided by EU nations and the
International Monetary Fund to stabilise the euro zone —
following a rescue of debt-ridden Greece — has not stopped the
bloc’s currency tumbling.

Several euro zone governments have followed Athens in
announcing or planning austerity measures to shore up their
credit ratings and avoid having to seek a Greek-style bailout.

But doubts remain about their ability to push through savage
spending cuts in the teeth of public opposition.

Geithner added last-minute stops in Britain and Germany to
his itinerary when the S&ED talks wrap up on Tuesday to discuss
conditions with his counterparts in London and Berlin and with
European Central Bank President Jean-Claude Trichet in
Frankfurt.
(additional reporting by Glenn Somerville)
(Reporting by Farah Master; Editing by Mike Peacock)

UPDATE 2-Geithner: global economy can handle Europe strains