hurricanemaxi
Joined: 08 Sep 2011
Posts: 66
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 Posted: Tue Jan 10, 2012 8:20 am Post subject: Geithner Seeks China Support on Iran But Presses on Yuan |
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U.S. Treasury Secretary Timothy F. Geithner will urge Asia's two biggest economies to cut Iranian oil imports and seek to narrow differences with China on trade and currency disputes on a visit to Beijing and Tokyo this week.
Geithner arrives in Beijing today to meet with Chinese Vice Premier Wang Qishan and will hold talks with Premier Wen Jiabao, Vice President Xi Jinping and Vice Premier Li Keqiang tomorrow. In Japan, he is due to meet with Prime Minister Yoshihiko Noda and Finance Minister Jun Azumi on Jan. 12.
Geithner is likely to encounter resistance in China, which disagrees with U.S. assertions that its currency is undervalued and is sparring with the Obama administration over trade in goods from chicken to steel. At the same time, he may seek to avert any public split at a time when a likely European slide into recession is already clouding the global economic outlook.
“These are the world’s second- and third-largest economies and the two biggest holders of Treasury bills,” said Stephen Myrow, a U.S. Treasury official during the administration of George W. Bush and now managing director of ACG Analytics Inc., a Washington investment research firm. “These are relationships that need to be continually nurtured.”
A plea to cut back on Iranian oil, tied to the Obama administration’s sanctions last month aimed at that country’s nuclear program, may not resonate with Chinese officials, intelligence and foreign-affairs analysts said.
‘Seen as Rogue’
“China will be less OK with it than Japan,” Matthew Levitt, a former financial intelligence official at the Treasury Department who is now at the Washington Institute for Near East Policy, said in an interview. “But neither wants to be seen as rogue.”
The two countries are the largest importers of Iranian oil, with China accounting for 22 percent and Japan buying 14 percent of Tehran’s crude oil exports during the first half of last year, according to the U.S. Energy Information Administration. As a group, the European Union buys 18 percent of Iran’s oil exports.
Geithner may also tell Chinese officials that they need to follow through on pledges to shift the world’s second-largest economy more toward domestic demand and away from exports, William Cline, a senior fellow at the Peterson Institute for International Economics in Washington, said in an interview yesterday. The real value of the yuan “needs to rise by 10 to 20 percent,” he said.
Currency Report
The Treasury Department said Dec. 27 in its twice-yearly report on global currencies that the yuan is substantially undervalued and the U.S. will “press for policy changes that yield greater exchange-rate flexibility.” China’s state-run Xinhua News Agency replied in a commentary that the U.S. should move beyond the “useless, meaningless” quarrel over the exchange rate.
The yuan weakened yesterday 0.08 percent to 6.3146 per dollar as of 4:30 p.m. in Shanghai, according to the China Foreign Exchange Trade System.
China’s growth may slow to 8.5 percent this year, down from 9.2 percent in 2011, according to the median estimate of economists in a Bloomberg News survey. The central bank lowered the required reserve ratio for banks for the first time in almost three years in December to encourage lending, a shifting of its stance from fighting inflation as price pressures ease.
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