Geithner faces a lonely campaign against yuan
WASHINGTON, Sept. 27: The US treasury secretary, Mr Timothy Geithner, faces a lonely campaign to make China’s currency a major issue at the next Group of 20 summit as would-be allies shrink from confronting Beijing.
Pressured by the US lawmakers, Mr Geithner has vowed last week to mobilise countries at the November 11-12 summit in South Korea to press China for faster appreciation of the yuan .
Interviews with officials from G20 countries suggest that Mr Geithner — who has acknowledged that few countries are willing to confront China — could be leading a posse of one in Seoul.
“The US is more determined than the rest of the G20 to get something out of China on the yuan,” a euro zone monetary official said, speaking on condition of anonymity.
“It’s largely a bilateral matter with the rest looking on as spectators, either because they don’t count enough or because they aren’t very interested,” the official said.
The South Korean finance minister, Mr Yoon Jeung-hyun, has ruled out the yuan as a G20 topic, saying the forum might take up exchange rates in general or their impact on the global economy.
“But aside from that, I do not believe that it is appropriate to have a discussion regarding the foreign exchange rate or level of a specific country,” Mr Yoon said on Thursday. Mr Geithner’s drive to make China’s currency policy a G20 summit issue appears to be a way to buy time for President Barack Obama’s administration as it deals with an angry Congress in the run-up to the November 2nd US elections. The Obama administration, and Mr Geithner in particular, had largely avoided actions that would antagonise China in past G20 meetings. But it faces an increasing drumbeat of calls for action on the yuan from beleaguered Democrats who say a stronger Chinese yuan would bring relief to American workers.
In a move likely to increase tension with China, the House of Representatives Ways and Means Committee on Friday has approved a bill that would let the United States slap duties on goods from countries with undervalued currencies.
The bill may never become a law, because it faces uncertain prospects in the Senate.
Since China’s central bank in June said it would let the yuan fluctuate more freely, it has risen 1.8 percent — accelerating the most as US pressure mounted. Many US lawmakers believe that China keeps its currency undervalued by as much as 40 per cent to stoke exports at the expense of US jobs, a claim questioned by many economists.
China can count on the solidarity from its partners in BRIC countries. “Putting pressure on a country is not the right way for solutions,” Brazilian foreign minister, Mr Celso Amorim, said, and added that Brazil enjoyed good coordination with China and “we can’t forget that China is currently our main customer.”
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