US’ Geithner: China engaged on forex-Bloomberg TV

GYEONGJU, South Korea, Oct 24 (BestGrowthStock) – U.S. Treasury
Secretary Timothy Geithner said China will continue to move
toward exchange rate flexibility and is now actively engaged on
global foreign exchange issues.

Geithner, in an interview with Bloomberg Television after
Group of 20 finance leader meetings concluded here on Saturday,
said China views a higher yuan rate versus the dollar as in
Beijing’s interest because it does not want the U.S. Federal
Reserve to control its monetary policy.

“They’re an independent country, a large economy. They need
the flexibility to run their policies in a way that makes sense
for China,” Geithner said.

“And that requires that their exchange rate move up over
time as they’re now doing and we want to see that continue.
They’ve got a ways to go but I think they’re committed to do
that,” he said.

“I think you’re going to see them continue to move.”

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Geithner’s comments in the interview came hours before he
travelled to Qingdao, China, to meet with Chinese Vice Premier
Wang Qishan to discuss unspecified bilateral economic matters.

The U.S. Treasury chief has delayed a decision on whether
to declare that China manipulates its currency for export
advantage. Global economists and U.S. lawmakers contend that
China’s yuan is at least 20 percent undervalued.

The semi-annual Treasury currency report was due on Oct.
15, but Geithner opted to delay it in order to press his case
at multilateral meetings, including Gyeongju and a Nov 5-6 G20
leaders summit in Seoul.

At the Gyeongju meeting in southeastern Korea, the G20
members pledged to shun competitive currency devaluations and
reduce current account imbalances, though they stopped short of
numerical goals based on percentages of gross domestic product.

Geithner said it was significant that the G20 directly
addressed currencies with cooperation from China and other key
emerging markets.

“We’ve had a long period where the major economies,
principally Japan, Europe and the United States, bore all the
burden of cooperation on exchange rate questions. They
dominated all those discussions,” Geithner said.

“But the world’s changed dramatically and it’s very
important that we’re discussing these things with China, with
India, with Brazil, with the emerging market economies all
around the world that are growing so rapidly.”

In the past, Beijing had resisted specific mentions of
currency rates in G20 statements.

Geithner added that a numerical goal for current account
surpluses and deficits may eventually settle to around 4
percent of GDP.

“You’ve heard people talk about that and my own personal
view is that will become the benchmark for the future,”
Geithner told Bloomberg TV.

“That’s because if you look at what major economies project
going forward — what they expect to happen if they pursue the
policy they have been pursuing, most countries see the balances
either staying below 4 percent, or falling to 4 percent over
the medium term.”

China projects a current account deficit of 4 percent or
less over the next three to five years as its economy grows.

Turning to complaints about easy U.S. monetary policy,
Geithner said most G20 countries understand the need for the
U.S. to maintain policies to boost growth.

“The countries around the room understand that imperative.
They of course recognize that the future growth depends a lot
on how successful we are…in digging out of this hole more
rapidly,” he said.

But German Economy Minister Rainer Bruederle criticized the
Federal Reserve’s liquidity policies, saying they indirectly
manipulated exchange rates.

Geithner at a news conference defended the U.S. approach,
saying he backed a strong dollar and did not expect continued
criticism of U.S. monetary policy.

“I will take this opportunity to reaffirm once again that
the policy of the United States is to support a strong dollar.
We in the United States recognize the special responsibility
that we have to contribute to global financial stability in
common with development goals as a reserve currency.”
(Reporting by David Lawder; Editing by Miral Fahmy)

US’ Geithner: China engaged on forex-Bloomberg TV