- The Washington Times - Wednesday, July 29, 2009

The United States opened the door Tuesday to giving China a greater role in the world economy and senior positions at the leading international financial institutions, a tacit recognition of the growing role China is playing in the U.S. economy.

Zhou Xiaochuan, governor of the People’s Bank of China, said during two days of high-level talks in Washington that Obama administration officials had agreed that emerging economies - including China - should enjoy a “greater voice and representation” on the international financial scene.

He added that U.S. officials had promised to support “qualified candidates from China being given full consideration” to assume high-level positions with international financial institutions such as the World Bank, International Monetary Fund and other global economic bodies.

The concessions reflected the growing economic interdependence between the United States and China, a major supplier of U.S. consumer goods that saw its growth sharply curtailed when America succumbed to recession.

Speaking at the end of the two days of talks Tuesday, Treasury Secretary Timothy F. Geithner glossed over contentious issues of currency, trade and the U.S. budget deficit in favor of emphasizing areas of agreement.

“The forceful policy responses by China and the United States have helped pull the global financial system back from the edge of failure,” Mr. Geithner said at a post-summit news conference.

The United States, striving to ease the fears of Chinese investors who have acquired hundreds of billions of dollars in U.S. debt, promised to reduce its soaring budget deficit, which is projected to hit a record $1.84 trillion this year.

For its part, China vowed to work toward a key U.S. goal that it foster greater domestic growth to reduce its reliance on exporting goods to the United States.

The two sides publicly sidestepped the issue of the low value of China’s currency, which Western economists say is grossly undervalued and contributes to America’s widening trade deficit with the Asian giant.

The head of China’s central bank rocked markets worldwide in March when he suggested that the U.S. dollar be replaced as the world’s key reserve currency by an alternative currency or basket of currencies.

Mr. Zhou declined to comment on the matter Tuesday.

Mr. Geithner said earlier Tuesday that strengthening the economies of developing countries was vital to securing global financial stability and avoiding a repeat of the recent near meltdown of international credit markets.

“Today, we will discuss governance reforms to help the [international financial institutions] be more representative of dynamic emerging economies, such as China, as well as strengthen their capacity to prevent future crises,” he said.

Mr. Zhou also said his country has vowed to implement reforms to stabilize its financial markets, which Western governments say lack sufficient regulation and transparency.

The central banker said China is “committed to reform and opening up, and promoting market development, which are essential for building a robust financial system.”

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