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Geithner calls China currency reforms promising

Associated Press Modified: May 3, 2012 at 11:01 pm •  Published: May 3, 2012

BEIJING (AP) — U.S. Treasury Secretary Timothy Geithner told President Hu Jintao on Friday that China's moves toward a more market-oriented exchange rate are "very promising" and said economic relations are improving despite occasional tensions.

Geithner, along with U.S. Secretary of State Hillary Clinton, met Hu during an annual high-level dialogue at which complaints about currency controls are a key issue. The dialogue has been overshadowed by a tussle over a Chinese legal activist but comes as pressure on the U.S. and other Western governments to create jobs are fueling disputes with Beijing.

Geithner and other U.S. officials at this week's talks have urged Chinese leaders to press ahead with promised market-oriented reforms they hope will expand sales for foreign companies in China's heavily regulated economy.

"We consider the broad direction of the economic reforms that you have laid out — to move to a more market-oriented exchange rate system, to expand consumption and domestic demand, to open up the Chinese economy further to foreign competition, to create a more modern financial sector — we think these are very promising reforms," Geithner told Hu.

Beijing has allowed its yuan to strength gradually and in April widened the band in which the tightly controlled currency is allowed to trade each day. But changes have been too slow to mollify critics. Some U.S. lawmakers are calling for punitive tariffs on Chinese goods if Beijing fails to act faster.

In a speech last week, Geithner complained an undervalued yuan was a source of "unfair competition" and hurts foreign companies at a time when China's trading partners are trying to boost exports. He called for a "stronger, more market-determined" exchange rate and said that would help the global economy.

On Friday, Geithner told Hu that despite "inevitable tensions" in U.S.-Chinese ties, "we are building a stronger economic relationship."

Hu said the annual dialogues have "achieved positive agreements" but did not comment on specific disputes during a portion of the meeting reporters were allowed to see.

Beijing is in the midst of a multiyear effort to boost domestic consumption and reduce reliance on exports and investment but change has been slow.

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