Monday June 1, 04:34 AM
Geithner urges China to make yuan more flexible
BEIJING (AFP) - US Treasury Secretary Timothy Geithner urged China to allow its exchange rate to become more flexible, kicking off a two-day visit to Beijing expected to focus on the global economic crisis.
In a speech at Peking University, Geithner was to praise Beijing's strategy to address the downturn, saying efforts to stimulate domestic demand would create jobs and balance economic growth.
"An important part of this strategy is the government?s commitment to continue progress toward a more flexible exchange rate regime," Geithner said, according to an advance text of his speech.
"Greater exchange rate flexibility will... encourage resource shifts to support domestic demand, and provide greater ability for monetary policy to achieve sustained growth with low inflation in the future."
Geithner created waves at his confirmation hearing in January when he said in a written reply to a senator that US President Barack Obama "believes that China is manipulating its currency."
In April, Obama's administration said China had not manipulated its currency to snare a competitive advantage, but insisted that the yuan remained undervalued.
Geithner will hold discussions with Vice Premier Wang Qishan on Monday, before meeting with President Hu Jintao and Prime Minister Wen Jiabao on Tuesday.
For years, the United States has urged Beijing to deepen the reform of its exchange rate regime, hinting that China kept the value of the yuan, or renminbi, artificially low to boost exports.
Thanks to its export-oriented economy, China has built up the world's largest forex reserves, with much of its nearly two trillion dollars in foreign exchange coming from huge surpluses with the United States.
One of the main purposes of Geithner's visit is to reassure China that its massive US bond holdings are safe despite Beijing's concerns about Washington's rising debt, officials in Washington said.
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