Obama: China ‘Manipulating’ the Renminbi

Amid speculation of how U.S.-China relations will shift under Obama, Tim Geithner, the new choice for Treasury Secretary has given some indication of the new administration’s priorities. From the Financial Times:

In a written response to questions from senators, Mr Geithner, whose nomination was supported on Thursday by a clear majority of the Senate’s finance committee, said: “President Obama – backed by the conclusions of a broad range of economists – believes that China is manipulating its currency.” Mr Obama would “use aggressively all the diplomatic avenues open to him to seek change in China’s currency practices”, he said.

The price of long-term US Treasury bonds fell after Mr Geithner’s remarks, with some traders concerned that Beijing might ease up its purchase of US assets. China is the largest foreign holder of US Treasuries after Japan, and more than half of the $5,500bn Treasury market is held by foreign investors.

Mr Geithner stopped short of pledging that the US Treasury would formally name China as an exchange rate manipulator in its annual currency report, due in the spring. “The question is how and when to broach the subject in order to do more good than harm,” he said.

See also “Remarks by Geithner ‘will anger China’” from the FT. Tim Geithner studied East Asian Studies and has studied Chinese language as well. Read more about him via Wikipedia.

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