New Delhi: US treasury secretary Timothy Geithner on Monday said China is supportive of the Group of 20’s framework for rebalancing the global economy, and that he expects broad consensus on it at a leaders’ summit this week.
Geithner, traveling as part of a state visit by US President Barack Obama, was speaking in New Delhi after meeting finance minister Pranab Mukherjee in part to discuss the G-20 agenda to limit trade imbalances.
“What we have proposed is a framework which incorporates early warning indicators of large surpluses or deficits which can then be monitored,” Geithner told an audience of US and Indian business leaders.
There is already “a good deal of consensus” on the framework, which he said was necessary to check excess volatility in international markets and protectionism.
China was supportive of it, he said.
“Exchange rates would be a part of the framework, and the framework is important to check excessive volatility in financial markets,” he said.
At last weekend’s meeting of finance chiefs from the Asia-Pacific Economic Cooperation (APEC) forum, Geithner said the United States would not seek G-20 endorsement of targets to limit current account surpluses or deficits to around 4% of gross domestic product.
Instead, he said he wants to develop ways to measure when imbalances are too big and may cause problems.
The notion of 4% as a sustainable level, which emerged from a G-20 finance ministers’ meeting in Gyeongju, South Korea, and was subsequently endorsed by Geithner, was roundly criticized by a number of countries, including Germany and China, which called it outmoded central planning.
Geithner said signs of broader inflation pressure were starting to appear in emerging economies.
Geithner also said on Monday it is in China’s interest to move faster on yuan appreciation, while saying that Beijing had shown signs of beginning to relax capital controls.
Washington blames Beijing for holding down the yuan at a level it says is unfairly low, giving Chinese exporters a pricing advantage that hurts US jobs.
Geithner has fielded criticism from a number of countries over the US Federal Reserve’s decision last week to pump another $600 billion into the US banking system by purchasing Treasury debt.
The move is seen as weakening the dollar and boosting capital flows to faster-growing emerging markets in search of better returns, putting upward pressure on these currencies.
On Wednesday, Geithner will travel to Abu Dhabi, to meet with the crown prince, Sheikh Mohammed bin Zayed al-Nahayan to discuss efforts to cut off financing for terrorism, and then travel to Singapore for meetings with government officials.
He will end up in Seoul on Thursday to join Obama for the G20 leaders’ summit.