U.S. Treasury Secretary Timothy Geithner said on Wednesday that China needs to raise the value of the yuan more quickly and faster progress could pave the way for greater access to U.S. high-tech goods.
Offering a carrot-and-stick approach ahead of a state visit by Chinese President Hu Jintao, Geithner laid out his view of each sides’ priorities and said a failure by Beijing to allow for more currency appreciation could damage China’s economy.
“China still closely manages the level of its exchange rate and restricts the ability of capital to move in and out of the country,” Geithner said. “These policies have the effect of keeping the Chinese currency substantially undervalued.”
He described China as focused on taking greater advantage of U.S. investment opportunities, gaining easier terms of market access and being able to buy U.S.-made high tech goods.
“We are willing to make progress on these issues, but our ability to move on these issues will depend of course on how much progress we see from China,” Geithner said in an address delivered at Johns Hopkins’ School of Advanced International Studies.
A faster yuan rise has topped the U.S. agenda for years amid complaints from U.S. manufacturers and politicians that Beijing manipulates its currency to gain an unfair trade advantage that has cost millions of American jobs.