US Treasury Secretary Timothy Geithner on Monday said China is supportive of the Group of 20's framework for re-balancing the global economy, and he expects broad consensus on it at a leaders' summit this week. Geithner, speaking in the Indian capital during a state visit with President Barack Obama, earlier met with Indian Finance Minister Pranab Mukherjee in part to discuss the G20 agenda.
"I'm very confident that you're going to see very strong consensus on this basic framework because it meets the basic tests and it's better than the alternatives," Geithner told an audience of Indian business leaders. "The Chinese are very supportive of it. It has a lot of benefits to them." The run-up to week's G20 summit has been overshadowed by disagreements over moves by the US Federal Reserve to print extra money to buy $600 billion of government bonds over coming months.
Critics led by China and Germany argue more quantitative easing could depress the dollar and cause a potentially destabilising flow of money into emerging economies. Obama defended the policy on Monday, suggesting it was growth-friendly for both the United States and the whole world.
Geithner reaffirmed a G20 plan to limit current account surpluses and deficits does not contain numerical targets, which he called economically unfeasible. Several countries had objected to suggestions that such imbalances be limited to around 4 percent of gross domestic product.
"What we have proposed is a framework which incorporates early warning indicators of large surpluses or deficits which can then be monitored," Geithner said. He said limiting current account imbalances was needed to check excess volatility in financial markets and combat protectionist pressures, adding that exchange rates were a key part of the plan. The US Treasury chief said China was the early stages of reforming its currency, a move that was "overwhelmingly in its interests", as well as those of its trading partners.
Washington blames Beijing for holding down the yuan at a level it says is unfairly low, giving Chinese exporters a pricing advantage that hurts US jobs. Geithner has delayed the delivery of a report on whether China manipulates its currency until after the G20 summit in Seoul.
"It's beginning to start to make the changes that will allow for broader convertibility over time, but those are in a very early stage," Geithner said of China. Geithner said the United States would work hard to improve its economic relationship with China.