US hopes China will move on currency

United States Treasury Secretary Tim Geithner emerged from a surprise meeting with Chinese Vice-Premier Wang Qishan tight-lipped about whether China was ready to announce a revaluation of its currency.

News of yesterday's meeting excited hopes of a deal to ease one of the biggest sources of economic tension between the two countries, namely the value of the renminbi.

US politicians are angry that the communist regime has pegged the renminbi against the dollar at what they say is a greatly undervalued level.

By doing so, China is artificially stimulating its exports to the US, they say, and there has been growing pressure on Geithner to formally designate China as a currency "manipulator" - a move that would trigger economic reprisals.

Reports suggest that Treasury officials are optimistic that the Chinese will relax their position, even though yesterday's meeting did not result in any statement about the renminbi.

The 75-minute meeting at Beijing Airport came just a few days before Chinese President Hu Jintao's scheduled visit to Washington for a nuclear security summit on April 12.

Geithner had been on an official visit to India, and the Chinese suggested that he stop in Beijing on his way home.

Last weekend, the Treasury Secretary delayed a decision on whether to label China a currency manipulator.

Continued high unemployment in the US and the trade deficit with China have been adding to pressure on the Obama Administration to make a ruling.

There were additional signals from China that the authorities are close to announcing a change of policy on the renminbi.

Treasury officials believe that China could announce a modest revaluation, together with a managed exchange rate policy of allowing the renminbi to float in a much wider range than used to be possible.

- INDEPENDENT