WASHINGTON (Reuters) – China’s yuan currency remains “substantially undervalued” and it is in Beijing’s own interest to let it appreciate more rapidly to ward off inflation risks, Treasury Secretary Timothy Geithner said on Wednesday.
In a speech ahead of Chinese president Hu Jintao’s state visit to Washington next week, Geithner held out the prospect of more cooperation on China’s bid for high-tech goods if Beijing was willing to let its currency rise in value more swiftly.
“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 told an audience at Johns Hopkins University. “These policies have the effect of keeping the Chinese currency substantially undervalued.”
The U.S. Treasury chief appeared to offer a carrot-and-stick approach to the bid to persuade Beijing to let its currency appreciate, which U.S. companies say is necessary to reduce a competitive advantage that Chinese exporters now have.
Geithner noted that China wants more access to U.S. high-technology goods and to invest more in the United States.
“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,” he said.
(Reporting by Glenn Somerville and David Lawder, Editing by Chizu Nomiyama)