- The Washington Times - Thursday, April 8, 2010

BEIJING (AP) — Treasury Secretary Timothy F. Geithner met with a Chinese vice premier Thursday and discussed economic ties in a sign the two sides might be trying to cool their rhetoric in a dispute over China’s currency controls.

In a brief statement after their meeting, the Treasury Department did not say whether the two sides discussed currency, and phone calls to China’s Finance Ministry were not answered. But Mr. Geithner had been expected to press Washington’s case for Beijing to ease exchange rate controls that critics say distort trade.

Geithner, who stopped in Beijing after a two-day visit to India, left for Washington after the meeting.

The decision to hold such a high-level encounter suggested Washington and Beijing are trying to narrow their differences over currency, which threaten to overshadow cooperation on the global economy, Iran’s nuclear program and other issues.

“The two sides exchanged views on U.S.-China economic relations, the global economic situation and issues relating to the upcoming economic track dialogue of the second U.S.-China Strategic and Economic Dialogue, to be held in Beijing in late May,” the Treasury statement said.

A Treasury official, speaking on the condition of anonymity because of the sensitivity of the discussions, said the meeting lasted 75 minutes and took place in the VIP terminal at Beijing International Airport. The official said the U.S. side was represented by Mr. Geithner and David Dollar, Treasury’s economic and financial emissary to China.

A Chinese Foreign Ministry spokeswoman, Jiang Yu, declined before the meeting to elaborate on the agenda, saying only that Vice Premier Wang Qishan and Mr. Geithner would “exchange ideas on U.S.-China relations and other issues of mutual interest.”

Critics say Beijing’s controls keep its yuan undervalued, giving its exporters an unfair price advantage and swelling its multibillion-dollar trade surplus. Some American lawmakers want punitive tariffs on imports from China if Beijing fails to act.

The Obama administration delayed a report to Congress due April 15 in which it had the option of citing Beijing as a currency manipulator, a designation that could lead to a World Trade Organization complaint and possible trade sanctions.

Beijing has publicly pushed back against the U.S. pressure, with the Chinese commerce minister warning that a rise in the yuan’s value would hurt exporters, who provide sizable employment. Despite the public intransigence, a debate has also been raging among senior officials and economists about whether to stand firm or let the yuan appreciate.

Economists expect Beijing to allow the yuan to rise as early as the second quarter of this year in order to ease strains in its own economy. A stronger yuan would increase the buying power of Chinese consumers, helping to increase domestic consumption and reducing reliance on exports.

Beijing tied the yuan to the dollar for decades but broke that link in 2005 and allowed it to rise by about 20 percent through late 2008. The government slammed on the brakes after the international financial crisis hit and has held its currency steady against the dollar to help exporters compete as a plunge in global demand wiped out millions of Chinese factory jobs.

AP Business Writer Elaine Kurtenbach in Shanghai contributed to this report.

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