Apr. 8 – U.S. Treasury Secretary Timothy Geithner will make an unscheduled visit to Beijing today to meet with Chinese Vice Premier Wang Qishan before making his way back home to the United States.
Discussions between Mr. Geithner and Mr. Wang are likely to revolve around the revaluation of China’s currency, the renminbi, which has been at the forefront of bilateral talks for quite some time. During the meeting, Mr. Geithner is expected to use softer dialogue than has been used by the Obama Administration recently as he outlines the U.S. case for a stronger renminbi.
Many political leaders in the United States have been calling on Congress to label China a currency manipulator – artificially keeping the value of the renminbi high to increase demand for Chinese exports abroad. Some experts, including former U.S. Treasury Secretary John Snow, believe such a move would be a “mistake.”
“It would be a mistake,” he said during an interview in Shanghai, reports Bloomberg. “There is a lot of pressure and I think it would be a mistake to succumb to that pressure because the important thing is to continue to have open trade and good trade relations.”
“It’s been the U.S. decision for some time that it’s in China’s interest over time to have a more flexible currency arrangement,” Snow said. “We recognize it’s a sovereign decision of a sovereign nation.”
An eventual revaluation of the currency is a necessary move for the Chinese government if they wish to stave off inflation in their rapidly rising economy – so the United States has to be careful about putting too much pressure on China. Less is more in this case, and Mr. Geithner should go about his meeting with Mr. Wang with subtlety and tact. This is a strong, proud, 21st Century China and officials in Beijing will not revalue their currency if it is perceived at home or abroad that they do so only to appease foreign antagonists, even if a stronger renminbi is in their nation’s best interest.
The United States is showing signs of moving in the right direction with comments like those Mr. Geithner said while in India on Tuesday, namely that it remains “China’s choice” whether it revalues the renminbi or not. The U.S. treasury secretary also decided to delay issuing the April 15 report to Congress on whether or not to label China a currency manipulator.
“I am confident that China will decide it’s in their interest to resume the move to a more flexible exchange rate that they began some years ago and suspended in the midst of the crisis,” he told India’s NDTV.
No concrete results are likely to come out of today’s meeting in Beijing, but the visit will help to ensure everyone is on the same page when high-level talks between the United States and China take place over the next few months.
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