U.S. Treasury Secretary Timothy Geithner said on Tuesday the Obama administration will push China forcefully to open its markets and maintain fair trading rules.
Interviewed during an appearance before the American Society of Newspaper Editors, Geithner repeated that it was important for China to move toward a flexible currency rate regime and added that he felt Beijing understands it was in that nation's own interest to do so.
We have an enormously productive, beneficial relationship with China today, he said. It's hugely important to companies large and small across the country.
But he said it was very important that China rely less on exports and move over time to a more flexible exchange rate system.
Geithner said that by maintaining a fixed currency rate, China effectively is losing control of its own interest-rate policy and said that would change if it moved to a more flexible currency system.
It's China's choice to do it but I believe ... that they will decide it's in their interests to move, Geithner said.
As a strong, large, independent, growing economy it doesn't make sense for that country to run a monetary policy, exchange rate regime that effectively lets the Federal Reserve set interest rates for their economy as a whole.
Geithner, who recently made a brief visit to Beijing, said the United States wants and will push for fair rules of the game in trade with China and other countries.
We will be very forceful and aggressive in making sure we are promoting changes for the prospects of a level playing field in those markets, Geithner said.
China's President Hu Jintao is in Washington for nuclear summit talks and met with President Barack Obama and Geithner on Monday. Hu told Obama China won't be pushed on currency reform and would base any decision on revaluing its yuan on its own economic needs.
But Hu also made clear that Beijing was committed to change without indicating when it might happen.
In wide-ranging questioning, Geithner also said it was completely untenable to take a position that the drive toward a U.S. regulatory overhaul should be slowed down as some Republican opponents claim.
He said there was still a terrible mess to be cleaned up after the financial crisis. He said he was optimistic
that lawmakers, just back from a recess and starting to work on financial regulation, will agree on rules to lessen reckless risk-taking that helped create the crisis.
(Reporting by Glenn Somerville; Editing by Kenneth Barry)