U.S. treasury chief starts ties-shaping visit to China

Tim Geithner, US Treasury secretary, has kicked off a two-day visit in Beijing, focusing on top-level talks to help coordinate bilateral economic issues, and facilitate the world's two jumbo economies walk out of a crippling recession at an earlier date.

Geithner's scheduled speech in the prestigious Peking University on Monday is expected to concentrate on the abilities of the two countries to better cooperate, in their joint effort to look for an exit strategy from the financial crisis.

His meetings with Chinese President Hu Jintao and Premier Wen Jiabao on Tuesday will touch on topics including financial, trade and currency coordination measures between Washington and Beijing.

US Treasury officials said that Geithner would encourage China to diversify its economy away from a heavy reliance on exports and to offer Beijing assurances that Washington intends to tackle its budget deficit and protect the value of China's huge investments in US treasury bonds.

Under the pressures of the global economic crisis, Sino-US relations are undergoing some fundamental changes, and China is growing more confident on the international stage, said the New York Times.

As China is now the largest holder of US treasury bonds, a growing number of Chinese officials and economists have expressed concerns in recent months that the value of those US bonds will plunge if inflation takes off or the dollar weakens. Some economists are pressing Chinese government to slow down its accumulation of Treasury bills and are even pushing for the creation of an alternative reserve currency as a hedge against the dollar, the New York Times reported.

Concerning about the dollar and the stability of US economy, Obama administration has taken a conciliatory tone with China and to search ways to work together with China to tackle the global financial crisis.

US Treasury officials say Geithner will also encourage China to work with US to create more balanced, sustainable growth for the two nations' economies.

Currency debates and trade frictions had flared during the Bush administration, even though relations were solid over all. For now, the Obama administration seems determined to avoid tense issues and to search for ways to cooperate with Beijing.

Under President George W. Bush, Treasury Secretary Henry Paulson held regular meetings with his counterparts in Beijing as part of the so-called the strategic economic dialogue. The Obama administration has decided to broaden those discussions, with Secretary of State Hillary Rodham Clinton taking part, in what is now being called the strategic and economic dialogue, reported the New York Times.

By People's Daily Online