ABC News’ Arlette Saenz reports:
Secretary Geithner called China’s currency “substantially undervalued” and stressed the need for China to revamp its economic system, from the exchange rate to its stance on intellectual property, in a speech at the School of Advanced International Studies at Johns Hopkins University.
“This is not a tenable policy for China or for the world economy,” Geithner said. “We believe it is in China’s interest to allow the currency to appreciate more rapidly in response to market forces. And we believe China will do so because the alternative will be too costly – for China and for China’s relations with the rest of the world.”
Speaking at his alma mater, Geithner’s remarks offered a preview of the administration’s position on U.S./China economic relations leading into President Hu Jintao’s visit to Washington next week.
“China of course presents enormous economic opportunities for the United States and for the world but its size, the speed of its ascent, and its policies are a growing source of concern both here and in countries around the world.”
Geithner voiced the administration’s concern with an economy dominated by the Chinese government, theft of intellectual property, and policies that favor Chinese technology over foreign technology. Geithner urged China to move away from its dependence on export driven growth and emphasize domestic consumption and innovation.
Despite being direct competitors, Geithner called the economic relationship between the U.S. and China “largely complementary” and resolved to encourage improvement in China’s economy.
“The prosperity of Americans depends overwhelmingly on the economic policies we pursue to strengthen American competitiveness. Even as we work to encourage further reforms in China, we need to understand that our strength as a nation will depend, not on choices made by China’s leaders, but on the choices we make here at home.”