Geithner: China manipulating US currency

As Timothy Geithner moved closer on Thursday to confirmation as the next Treasury Secretary,he signaled a confrontational shift in the US economic relationship with China,bluntly stating that the new administration thinks Beijing is manipulating its currency and will act aggressively using all the diplomatic avenues to change Chinas currency practices.

Chinas control of the value of the yuan,analysts say,has kept the currency artificially cheap for years,allowing the Chinese to build massive reserves through trade surpluses and making it harder for many countries,including the US,to compete with goods made there. It has created what many analysts call a global imbalance in wealth,with the Chinese reaping huge profits even as the US has sunk further into debt,much of it financed by the Chinese.

Geithners words which came in written comments to the Senate Finance Committee suggested that President Obama is prepared to challenge China far more vigorously. His statement echoed Obamas campaign vows to take a harder line on Chinas trade policies. Geithner pointed to new data from Beijing showing that growth slowed sharply in 2008 and said a further slowdown in China could delay recovery from the global downturn. The immediate goal should be for us to convince China to adopt a more aggressive stimulus package as we do our part to try to pass a stimulus package here at home, he said.