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US treasury secy Geithner in China for economic talks

US treasury secretary Timothy Geithner was in China today for talks with Vice Premier Wang Qishan that were expected to touch on the sensitive issue of the value of the yuan.

world Updated: Oct 24, 2010 11:21 IST

US treasury secretary Timothy Geithner was in China on Sunday for talks with Vice Premier Wang Qishan that were expected to touch on the sensitive issue of the value of the yuan.

Geithner was met by Wang at the airport in China's eastern coastal city of Qingdao with both officials immediately heading off for a working lunch, treasury spokesman Steven Adamske told AFP.

The two were discussing bilateral economic issues and "a lot of different things," Adamske said.

This would likely include China's currency, the yuan, which Washington believes is being kept grossly undervalued in order to help Chinese exporters.

China counters that irresponsibly loose US monetary policy is driving down the dollar and causing a wave of capital to flood emerging markets in search of higher yields.

Sunday's meeting comes after Geithner attended the just concluded Group of 20 finance ministers meeting in Gyeongju, South Korea.

In a statement released late Saturday, the US Treasury chief said the G20 meeting agreed that a "gradual appreciation" in the currencies of major trade-surplus nations was required.

"Countries with significantly undervalued exchange rates committed to move towards more market-determined exchange-rate systems that reflect economic fundamentals, as China is now doing," Geithner said in a statement.

But further efforts to stabilise international economic imbalances were necessary if the recovery from the global financial crisis was going to be successful, he added.

"This requires a shift in growth strategies by countries that have traditionally run large trade and current account surpluses, away from export dependence and toward stronger domestic demand led growth," Geithner said.

"This entails a range of policy changes, as you can see in the very broad range of domestic reforms being undertaken by China."