Treasury Secretary Tim Geithner will finally start to suggest that China is illegally manipulating its currency to Chinese companies an unfair advantage over US companies, the NYT reports.He won’t say this directly, of course.
“We are concerned, as are many of China’s trading partners, that the pace of appreciation has been too slow and the extent of appreciation too limited,” Geithner will say.
This is about as far from publicly accusing China of currency manipulation as you can get, but it has already provoked a reaction from China:
“It is groundless for the U.S. to criticise China’s exchange rate policy simply according to the trade surplus alone,” Yao Jian, spokesman with the Ministry of Commerce, said Wednesday at a news conference.
“China’s trade surplus against the United States only reflects part of the two parties’ economic relationship,” Yao said, “The United States has massive investment in the Chinese market, with $220 billion worth of sales volume annually. Taken together, China and the United State’s economic benefits are complementary.”
Will jawboning like this cause China to let the value of the yuan rise? It might help a bit, if Geithner leaves a way for China to save face by making it look like their idea. But Geithner isn’t really speaking to China here. He’s speaking to Americans who think that the reason the economy is in the tank is because China is a currency manipulator.
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