Business

Geithner says China is 'committed' to revaluing yuan

Timothy Geithner in Gyeongju, South Korea (23 October 2010)
Image caption Mr Geithner's meeting with the Chinese vice-premier was arranged at the last minute

US Treasury Secretary Timothy Geithner has said he believes China is now "committed" to allowing the yuan to go up in value.

Mr Geithner made the comment in a TV interview before he held talks with China's Vice-Premier, Wang Qishan.

The US has long said China keeps the value of the yuan artificially low to make its exports more competitive, something Beijing denies.

On Saturday, G20 finance ministers said they would refrain from such tactics.

Mr Geithner met with Mr Wang in the Chinese port of Qingdao, following the G20 meeting in South Korea.

A US official said the two sides "exchanged views on US-China economic relations", but did not reveal any of the details.

Mr Geithner had earlier told Bloomberg Television that the Chinese "need the flexibility to run their policies in a way that makes sense for China".

He added: "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."

'Gradual appreciation'

Mr Geithner's visit to China came after a last-minute invitation from Mr Wang.

On Saturday, the treasury secretary said the G20 meeting had agreed that a "gradual appreciation" in the currencies of major trade-surplus nations was required.

Mr Geithner added that if the global recovery from the economic crisis was going to be successful, there needed to be "more balance in the pattern of global growth".

"This requires a shift in growth strategies by countries that have traditionally run large trade and current account surpluses, away from export dependence and toward stronger domestic demand led growth."

"This entails a range of policy changes, as you can see in the very broad range of domestic reforms being undertaken by China."

Earlier this year, China promised greater "flexibility" in its currency approach, but since then the yuan has only risen slightly in value.

Many in the US say the yuan remains undervalued by as much as 20%.

The G20 finance ministers meeting in the South Korean city of Gyeongju also agreed to changes at the International Monetary Fund (IMF), giving major developing countries more of a say.

US President Barack Obama and Chinese President Hu Jintao are expected to meet at G20 leaders' summit in the South Korean capital Seoul, which takes place on November 11-12.

President Obama is scheduled to attend, but President Hu's attendance has yet to be officially confirmed.

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