U.S. Treasury Secretary Timothy Geithner says China should implement a number of economic reforms, including a move to a more flexible market-driven exchange rate.
During a speech Tuesday before the U.S.-China Business Council, Geithner laid out economic issues to be discussed during high-level talks with Chinese officials next week. He said a stronger yuan would reduce trade imbalances between the U.S. and China, and boost Beijing’s efforts to ward off inflation.
Geithner acknowledged China has allowed the yuan to rise in value by about five percent against the U.S. dollar since June. But U.S. lawmakers and manufacturers say the currency is undervalued by as much as 40 percent, making Chinese-made goods cheaper on the global market.
Geithner also said Beijing must stop providing low-cost loans to large, state-owned enterprises, giving them an advantage over other firms.
Geithner also called on China to honor pledges made by President Hu Jintao during his state visit to Washington in January, including better protection for intellectual property rights held by American companies.
Geithner and Secretary of State Hillary Clinton will host the annual U.S.-China Strategic and Economic Dialogue in Washington next week. The Chinese delegation will be led by Vice Premier Wang Quishan and State Councilor Dai Bingguo.
