Geithner in China to Talk Iran, Yuan

U.S. Treasury Secretary Timothy Geithner arrived in Beijing on Tuesday for high level meetings with Chinese leaders to discuss China’s relationship with Iran, the European debt crisis and the valuation of the yuan. From The New York Times:

In meetings on Tuesday and Wednesday with Premier Wen Jiabao; Vice President Xi Jinping; and Wang Qishan and Li Keqiang, vice premiers, the two sides are expected to focus on ways to keep Europe’s debt crisis from dragging the global economy back into recession.

At the first meeting Tuesday evening, Mr. Wang alluded to the global role facing the United States and China, saying the countries were “having important cooperation in the multilateral and global arena in the areas of economy, finance, trade policies and also G-20 related affairs.”

The visit also offers a chance for a meeting with Mr. Xi, the presumed successor to President Hu Jintao, before Mr. Xi travels to the United States this year.

Yet Mr. Geithner seems unlikely to gain many concessions on the two top issues for this visit: the valuation of the renminbi and American efforts to impose new financial sanctions on Iran’s nuclear program.

Geithner’s arrival comes as sources told The Wall Street Journal on Tuesday that President Barack Obama plans to establish a task force to uncover trade violations by China:

The group, called the Enforcement Task Force, will aim to enforce U.S. trade rules. Despite the generic name, officials said the group is specifically meant to target China. It will include officials from various government agencies, including the Treasury Department, the Commerce Department, the Energy Department and U.S. Trade Representative’s office.

Mr. Obama is expected to announce the initiative during or around his State of the Union address later this month. The committee—and Mr. Obama’s broader effort to be tougher on China over currency, market access and intellectual property rights—also are expected to be on the White House’s agenda when Vice President Xi Jinping of China visits Washington next month.

The formation of the task force has significant political implications for the 2012 election. It is a large plank in Mr. Obama’s broader intent to challenge China more, an effort he telegraphed during a trip through Asia last November.

Though the United States has made efforts to oppose Iran’s development of nuclear weapons and limit its oil revenues by imposing sanctions on financial institutions that do business with its central bank, one expert told Reuters that Geithner faces an difficult task when trying to bring China on board:

“I think the key here is to try to isolate China. If the U.S. can effectively get Japan — but more importantly Russia — on side, then China will feel a lot of pressure to join onto any U.S.-led multilateral sanctions,” said John Lee at the Centre for International Security Studies at the University of Sydney.

“If it’s just a bilateral sanction between Geithner and his counterparts, then I think Washington will achieve very little this week,” he told Reuters Insider TV.

Chinese Vice Foreign Minister Cui Tiankai told The People’s Daily that China’s trade relations with Iran had nothing to do with the nuclear issue, and a Tuesday Global Times Op-Ed expressed the need to support Iran while questioning the reality of U.S. military threats:

China has made clear its opposition to further sanctions against Iran. Despite pressure from the US and European countries, China should continue trading with Iran.

Though some Chinese companies have shrunk their investment in Iran out of fear of US sanctions, it doesn’t have to be the attitude of China. Instead, if Chinese companies are sanctioned by the US due to their legal trade with Iran, China should take countermeasures.

In the absence of conclusive evidence that Iran is developing nuclear weapons, China should provide diplomatic assistance to Iran, by maintaining high-level official visits and opposing any biased treatment of the country.

The US is not ready for a war against Iran yet. Its economy could barely afford a new war and military action against Iran would be unfavorable to Barack Obama’s reelection plans. All these suggest that using force against Iran is the most difficult decision the US faces in the new decade.