Geithner urges China for reforms

Treasury Secretary Timothy Geithner urged China to let its currency strengthen and move forward with economic reforms ahead of a meeting with leaders in Beijing. Geithner spoke on Thursday about the state of China-US relations and a host of other economic issues during a San Francisco event hosted by the Commonwealth Club of California. He and Secretary of State Hillary Clinton are traveling to Beijing next week for the fourth round of the US-China Strategic and Economic Dialogue. The treasury secretary said the Obama administration welcomes recent changes to China’s exchange rate system but believes the Chinese renminbi needs to appreciate further against the dollar. “It will provide China the independence and flexibility to respond to future changes in growth and inflation,” Geithner said. “And it will help the world economy, reducing a source of unfair competition with China’s trading partners.” He urged China to continue reforming its financial system, which is dominated by state-owned banks that channel resources to state enterprises at the expense of private companies. Geithner said it was unclear whether China’s economic reforms would be affected by a political crisis triggered by the fall of former Chongqing Mayor Bo Xilai, a rising politician toppled over a scandal involving his wife’s alleged participation in the murder of a British businessman. The treasury secretary said he was encouraged by China’s recent decisions to widen the trading range of its currency.