Geithner hints of tougher stance on China

WASHINGTON, Jan. 23 (UPI) -- U.S. Treasury Secretary-designate Tim Geithner said the Obama administration will work assertively to change what it thinks is China's currency manipulation.

Geithner, whose confirmation by the full Senate is expected Monday, indicated President Barack Obama's administration would be more confrontational in its approach toward China, saying it would use "all the diplomatic avenues" to change China's currency practices, The Washington Post said Friday.

How China controls the value of the yuan has been a source of contention for years, with some economists saying the Chinese keep their currency artificially low to keep a lid on export prices to generate trade surpluses, leading to global capital imbalance, the Post said.

Geithner's comments, included in his statement to the Senate Finance Committee, reflect Obama's campaign pledge to look harder at China's trade policies even though he said boosting the slumping U.S. and Chinese economies is a more immediate goal.

New data from Beijing indicate growth slowed sharply in 2008, Geithner said, adding that a further slowdown in China could delay recovery from the global downturn.

"The immediate goal should be for us to convince China to adopt a more aggressive stimulus package as we do our part to try to pass a stimulus package here at home," he said.

"It was very interesting to see that Geithner has stated that China is manipulating its currency," Brookings Institution senior fellow Eswar Prasad said. "Things are going to get quite heated on the China-U.S. front this year. This statement was clearly a shot across the bow, signaling that this administration does not plan to mollycoddle the Chinese."