Business

Published: Monday June 1, 2009 MYT 7:51:00 AM
Updated: Monday June 1, 2009 MYT 2:26:46 PM

US Treasury said Monday global recession losing force(2nd update)


BEIJING: Treasury Secretary Timothy Geithner said Monday that the global recession seemed to be losing force but that it will be critical for the United States and China to institute major economic reforms to put the world on a more sustained footing.

Geithner said that a successful transition to a more balanced and stable global economy will require substantial changes to economic policy and financial regulation around the world and especially in the world's largest and third largest economies.

"How successful we are in Washington and Beijing will be critically important to the economic fortunes of the rest of the world," Geithner said in a major economic address at Peking University, where he had studied Chinese as a college student more than two decades ago.

The Obama administration's chief economic spokesman was using his first trip to China as treasury secretary to pursue closer economic ties with China, seeking to turn the page on years of acrimony between the two countries over contentious trade issues.

Geithner had told reporters on his way to Beijing that he wanted to foster the same kind of working relationship with China that the United States has enjoyed for decades with major European economic powers.

In his speech, Geithner had extensive praise for the economic transformation China has achieved and avoided emphasizing past trade disputes such as the aggressive campaign waged by the Bush administration to force China to move faster to allow its currency, the yuan, to rise in value against the dollar.

American manufacturers see the undervalued yuan as a primary culprit in the soaring trade deficits the United States has with China, deficits that critics contend have played a major role in the loss of millions of American manufacturing jobs.

Geithner struck a positive note on the global economy, noting a number of signs in the United States that the huge plunge in activity that occurred last year when the financial crisis struck with force had started to slow.

"The global recession seems to be losing force.... The financial system is starting to heal," Geithner said.

"These are important signs of stability and assurance that we will succeed in averting financial collapse and global deflation, but they represent only the first steps in laying the foundation for recovery," Geithner said.

"The process of repair and adjustment is going to take time."

Geithner said the necessary reforms will include getting the U.S. budget deficit under control once the recovery is firmly in place, something he said the Obama administration was committed to doing.

He said China will need to strengthen its social safety net in such areas as pensions and health care so that the Chinese will feel more confident about spending more.

That is viewed as critical if China is going to transform from an export-driven economy into one driven more by domestic consumption, a change that Geithner said was essential to assuring balanced world growth in the years ahead.

"Our common challenge is to recognize that a more balanced and sustainable global recovery will require changes in the composition of growth in our two economies," Geithner said.

Geithner sought to reassure the Chinese on the issue of getting control of the exploding U.S. budget deficit, which is projected to hit a record $1.84 trillion this year, a fourfold increase from last year's record, reflecting the massive spending to stimulate the economy and stabilize the banking system.

China is America's biggest creditor, holding $768 billion in Treasury securities. Geithner took a number of pointed questions from students, with several of them expressing concern about China's massive holding of U.S. Treasury securities, given the current surge in U.S. budget deficits.

Geithner responded to one question saying: "Chinese financial assets are very safe. We have the deepest, most liquid financial markets in the world."

Asked about the support being provided to General Motors and Chrysler, Geithner said he was "very optimistic" that the government's efforts would help the companies emerge in a stronger position and he said the administration planned for the assistance to be temporary.

"We want to have a quick, clean exit as soon as conditions permit," Geithner told the students.

While not a main focus of Geithner's trip, the U.S. also hopes China will play a positive role in resolving a tense dispute with North Korea over its nuclear weapons program.

Geithner could not escape the fallout from the recession even as he crossed the globe.

He took a military aircraft with the latest in communications equipment that allowed him to be in frequent contact with Steven Rattner, head of the administration's auto task force, and Obama economic aide Lawrence Summers, who phoned with updates on the pivotal weekend negotiations with General Motors Corp.

Geithner spent the trip in a private cabin at the back of the plane that was equipped with a desk and a bed.

Most of the time he was either working the phones, huddled with aides or revising the speech he was to give Monday.

China, with 1.3 billion people, ranks as the third largest economy after the U.S. and Japan.

Geithner said China's new status should be recognized with a bigger voice in such institutions as the International Monetary Fund.

In addition to meeting with some of his former professors on Monday, Geithner was scheduled to visit an economist training program set up by his father when the elder Geithner was in charge of Ford Foundation programs in Asia.

China has turned its huge trade surpluses with the U.S. into the largest holdings of Treasury debt, but has raised concerns about America's commitment to deficit reform.

Financial markets in recent weeks have sent long-term interest rates higher, a move that some attribute to worries about the U.S. budget deficits. - AP

Second report

BEIJING: U.S. Treasury Secretary Timothy Geithner said Monday that the global recession seemed to be losing force but that it will be critical for the United States and China to institute major economic reforms to put the world on a more sustained footing.

Geithner said that a successful transition to a more balanced and stable global economy will require substantial changes to economic policy and financial regulation around the world and especially in the world's largest and third largest economies.

"How successful we are in Washington and Beijing will be critically important to the economic fortunes of the rest of the world," Geithner said in a major economic address at Peking University, where he had studied Chinese as a college student more than two decades ago.

The Obama administration's chief economic spokesman was using his first trip to China as treasury secretary to pursue closer economic ties with China, seeking to turn the page on years of acrimony between the two countries over contentious trade issues.

Geithner had told reporters on his way to Beijing that he wanted to foster the same kind of working relationship with China that the United States has enjoyed for decades with major European economic powers.

In his speech, Geithner had extensive praise for the economic transformation China has achieved and avoided emphasizing past trade disputes such as the aggressive campaign waged by the Bush administration to force China to move faster to allow its currency, the yuan, to rise in value against the dollar.

American manufacturers see the undervalued yuan as a primary culprit in the soaring trade deficits the United States has with China, deficits that critics contend have played a major role in the loss of millions of American manufacturing jobs.

Geithner struck a positive note on the global economy, noting a number of signs in the United States that the huge plunge in activity that occurred last year when the financial crisis struck with force had started to slow.

"The global recession seems to be losing force.... The financial system is starting to heal," Geithner said.

"These are important signs of stability and assurance that we will succeed in averting financial collapse and global deflation, but they represent only the first steps in laying the foundation for recovery," Geithner said.

"The process of repair and adjustment is going to take time."

Geithner said the necessary reforms will include getting the U.S. budget deficit under control once the recovery is firmly in place, something he said the Obama administration was committed to doing.

He said China will need to strengthen its social safety net in such areas as pensions and health care so that the Chinese will feel more confident about spending more.

That is viewed as critical if China is going to transform from an export-driven economy into one driven more by domestic consumption, a change that Geithner said was essential to assuring balanced world growth in the years ahead.

"Our common challenge is to recognize that a more balanced and sustainable global recovery will require changes in the composition of growth in our two economies," Geithner said.

Geithner sought to reassure the Chinese on the issue of getting control of the exploding U.S. budget deficit, which is projected to hit a record $1.84 trillion this year, a fourfold increase from last year's record, reflecting the massive spending to stimulate the economy and stabilize the banking system.

China is America's biggest creditor, holding $768 billion in Treasury securities. While not a main focus of Geithner's trip, the U.S. also hopes China will play a positive role in resolving a tense dispute with North Korea over its nuclear weapons program.

Geithner could not escape the fallout from the recession even as he crossed the globe.

He took a military aircraft with the latest in communications equipment that allowed him to be in frequent contact with Steven Rattner, head of the administration's auto task force, and Obama economic aide Lawrence Summers, who phoned with updates on the pivotal weekend negotiations with General Motors Corp.

Geithner spent the trip in a private cabin at the back of the plane that was equipped with a desk and a bed.

Most of the time he was either working the phones, huddled with aides or revising the speech he was to give Monday.

China, with 1.3 billion people, ranks as the third largest economy after the U.S. and Japan. Geithner said China's new status should be recognized with a bigger voice in such institutions as the International Monetary Fund.

In addition to meeting with some of his former professors on Monday, Geithner was scheduled to visit an economist training program set up by his father when the elder Geithner was in charge of Ford Foundation programs in Asia.

China has turned its huge trade surpluses with the U.S. into the largest holdings of Treasury debt, but has raised concerns about America's commitment to deficit reform.

Financial markets in recent weeks have sent long-term interest rates higher, a move that some attribute to worries about the U.S. budget deficits. - AP

BEIJING: U.S. Treasury Secretary Timothy Geithner says the U.S. financial system is in much better shape these days and there is more stability in the overall economy.

Geithner told reporters traveling with him Beijing that there are a number of signs the U.S. economy is beginning to stabilize.

The U.S. has been mired in its longest recession since World War II.

But Geithner said much more needs to be done - both in the U.S. and elsewhere - to make a sustainable recovery possible.

Geithner also called for closer US-China economic ties.

Geithner, who arrived Sunday in Beijing for two days of talks with Chinese leaders, said he wanted to foster the same kind of working relationship with China that the United States has enjoyed for decades with European economic powers.

On his first visit to China as treasury secretary, Geithner said the Obama administration was committed to forging a new relationship with China after trade disputes with the U.S. over the past decade.

Those fights have reflected record U.S. trade deficits with China. U.S. critics of China's economic policies say they have contributed to the loss of millions of American manufacturing jobs.

But China is America's biggest creditor, holding $768 billion in Treasury securities.

The U.S. also hopes China will play a positive role in resolving a tense dispute with North Korea over its nuclear weapons program.

Ahead of his meetings, Geithner played down long-standing areas of disagreement such as China's currency, which U.S. manufacturers say is undervalued.

"We would like to build with China the kind of relationship we built with the G-7 over the last several decades," Geithner told reporters traveling with him to Beijing.

The Group of Seven includes the traditional economic powers - the U.S., Japan, Germany, Britain, France, Italy and Canada.

Geithner said the U.S. economy, mired in its longest recession since World War II, was beginning to stabilize.

"We are seeing more durable stability in the economy and the financial system is in substantially better shape," Geithner said.

But he said much more needed to be done in the U.S. and in other major economies to make a sustainable recovery possible.

Geithner could not escape the fallout from the recession even as he crossed the globe.

He took a military aircraft with the latest in communications equipment that allowed him to be in frequent contact with Steven Rattner, head of the administration's auto task force, and Obama economic aide Lawrence Summers, who phoned with updates on the pivotal weekend negotiations with General Motors Corp.

Geithner spent the trip in a private cabin at the back of the plane that was equipped with a desk and a bed.

Most of the time he was either working the phones, huddled with aides or revising the speech he was to give Monday.

China, with 1.3 billion people, ranks as the third largest economy after the U.S. and Japan.

Geithner said China's new status should be recognized with a bigger voice in such institutions as the International Monetary Fund.

President Barack Obama and other leaders of the Group of 20 major industrial countries and emerging economic powers, which includes China, Brazil and India, pledged in April to work cooperatively on overhauling the IMF and other global institutions.

The goal is to give them greater resources to deal with the crisis and provide China and other emerging countries with more say in how the institutions are run.

"We are committed to reforming the international system and our interests are best served by giving China a stake in that process," Geithner told reporters.

Geithner planned a speech Monday at Peking University assessing the global economy and U.S.-China relations.

He spent two summers at the university as a college student learning Mandarin Chinese.

At a briefing previewing the trip for Asian journalists, Geithner referenced those ties, saying he had taught Chinese while in college and had a "long personal interest" in the country.

But he insisted while he had worked hard at his Chinese language studies, he was not proficient.

"I cannot actually speak Chinese with competence," he said.

"I did study though for a long time, very hard. I practiced my characters very carefully."

In addition to meeting with some of his former professors on Monday, Geithner was scheduled to visit an economist training program set up by his father when the elder Geithner was in charge of Ford Foundation programs in Asia.

The Obama administration and China have come out with two massive economic stimulus plans while European countries have resisted Obama's calls to do more.

They say they do not want to face the same deficit problems that the U.S. has. China has turned its huge trade surpluses with the U.S. into the largest holdings of Treasury debt, but has raised concerns about America's commitment to deficit reform.

Financial markets in recent weeks have sent long-term interest rates higher, a move that some attribute to worries about the U.S. budget deficits.

The administration projects that the deficit for this year will hit $1.84 trillion, a record and four-times higher than the previous mark set last year.

Geithner said the administration had a credible program to reduce the deficits once the economy begins to recover.

"No one is going to be more concerned about future deficits than we are," he told reporters. - AP


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