China, U.S. prepare for new landmark talks on Geithner's visit

On June 1 and 2, 2009, Chinese leaders hold meetings with visiting US Treasury Secretary Timothy Geithner in Beijing. They expressed their willingness of further China-US cooperation on tackling the financial crisis and their commitment on the success of the first China-US Strategic and Economic Dialogue to be held in Washington D.C. in July.

President Hu Jintao: "China-U.S. relations show a good momentum of development as both sides have kept close contacts since the new U.S. administration took office"

Premier Wen Jiabao: "The foremost task for both countries is to work more closely to address the global economic downturn, oppose protectionism in trade and investment, promote reform in international financial system ... so as to ensure the stability and growth of China, the United States and the world.”

Vice Premier Wang Qishan: "We will send a message that China and the United States are cooperating substantively to get over the difficult times, which will help boost confidence, promote global financial stability and economic recovery."

Timothy Geithner, the current Secretary of the Treasury of the United States, had spent most of his early life outside the US, including China, Japan, Thailand, India and some African countries. He has served as an attaché at the US Embassy in Tokyo and studied Mandarin at the Peking University.

On Nov. 24, 2008, he was nominated Treasury Secretary by then-President-elect Barack Obama. The nomination was confirmed on Jan. 26, 2009. He plays a pivotal role in dealing with the financial crisis.

China manages its foreign exchange reserves under the principle of maintaining safety, liquidity and profitability. The US government bonds was one of the choices, said Liu Mingkang, Chairman of CBRC.

"Investing in U.S. Treasury bonds is an important component of China's foreign currency reserve investments," Hu Xiaolian, deputy governor of the PBOC said.

The American government "did not find that any major trading partner had manipulated its exchange rate for the purpose of preventing effective balance of payments adjustment or to gain unfair competitive advantage".

A number of countries are competing against one another to devalue their currency in order to weaken the price competitiveness of Chinese exports.

To allege that China is manipulating its currency exchange rate is completely unfounded ... to maintain the basic stability of the Chinese RMB is in the interest of not only China, but also the world economy.

The bilateral trade volume between China and the U.S. dropped to 62.08 billion USD in the first quarter, down 15.7 percent year on year. Export to the U.S. declined to 25.52 billion dollars, falling 14.9 percent from the previous year.

China would consider the current situation of bilateral trade, investment and economic cooperation, as well as the stability of the financial system when picking its next partner.

"The government should maintain the policy of giving top priority to increasing domestic demand while stabilizing external demand."

"Stimulating domestic consumption will not only spur the economy, but also meet the needs of the general public," said a researcher from China National School of Administration.

The central government plans to spend 293 billion yuan (about 42.84 billion U.S. dollars) on the social safety net this year, up 17.6 percent or 43.9 billion yuan over the estimated figure for last year.

The February trade figures showed a trade deficit of 36 billion U.S. dollars, equal to January's six-year low and well below the 62 billion dollars at the same period last year.