Timothy Geithner Believes The Chinese Efforts Are Not Enough
Timothy Geithner during his testimony today
China has made a “very, very” small progress to liberalize its currency, the Yuan, said on Monday the Treasury Secretary, Timothy Geithner, in his remarks published by the Wall Street Journal.
In an interview on Friday, Geithner was asked if he is satisfied with China’s efforts in regards to the Yuan. He said: “Of course not.”
“China has made a very important step in June, signaling that they will let the exchange rate reflect the market forces. But they did very, very little and have moved very, very slowly in the meantime. It is very important to us, and I think it is important for China, I think they recognize this; we must allow it to grow after a long time. ”
In the testimony released on Wednesday and prepared for U.S. lawmakers considering a tough new trade law, Geithner called on China to allow “significant, sustained appreciation over time” and for the Yuan to “fully reflect market forces”.
“We will take China’s actions into account as we prepare the next Foreign Exchange Report, and we are examining the important question of what mix of tools, those available to the United States and multilateral approaches, might help encourage the Chinese authorities to move more quickly.”, said Geithner during his testimony, quoted by Chinapost.
Geithner’s testimony comes amid a rising chorus of support from U.S. lawmakers and industry groups for punitive action, including a bill that would slap duties on Chinese imports to force Beijing to let the Yuan rise.
The Chinese currency is not free; its exchange rate is controlled by China’s National Bank.
Beijing has been accused by the West of deliberately keeping the Yuan undervalued and Western analysts say the undervaluation of the Yuan is about 40%.
China can afford such a policy due to the fact that its population isn’t free, but is being strictly controlled by the Chinese Communist Party. The policy contravenes to WTO practices and standards and its result led to the subsidy of Chinese exports, which in turn led to the accumulation of American capital in the banks of China, and the bankruptcy of U.S. and European manufacturers, which cannot compete with dumping prices charged by the Chinese.
In this way, the regime in Beijing accumulates outside capital, while ensuring internal stability by stimulating their production and maintaining low rates of unemployment, on account of which it bases its control over the population.
The U.S. is affected
Today, before the Senate and House of Representatives, Timothy Geithner addressed the Chinese currency issues and to present the latest opinions of the Obama administration in regards to what the U.S. should do to put pressure on the Chinese government to improve its monetary practices.
If the Treasury will report such a measure, the Obama administration should begin to impose protectionist measures on imports of goods from China, a long awaited measure by American manufacturers.
Commenting on the state of the U.S. economy, he said that “it heals, but the overall improvement and increased strength of engagement are not as rapid as the administration would like”.
Thursday the Yuan reached the highest level against the dollar in the last three months while awaiting the hearing in the Congress of the U.S. Treasury secretary, Timothy Geithner, in regards to the Chinese monetary practices.
The Bank of China has set a reference rate of 6.7181 Yuan to one U.S. dollar, which means an appreciation of the Yuan by 1.6% to 0.7% early this week.
Beijing has left, lately, several times the Yuan to appreciate slightly. But American experts estimate that China’s currency is significantly undervalued. The analysts believe China’s measure is meant to encourage exports.11
