Geithner's China Comments Not Formal Policy: White House

U. .S. Treasury Secretary-designate Timothy Geithner was not making a formal finding last week when he told senators China was manipulating its currency, a White House official said on Monday.

"Mr.Geithner was restating what the president had said during the campaign, not making any determinations," White House spokesman Robert Gibbs told reporters.

Beijing has bristled at the suggestion it is manipulating its currency for a trade advantage and raised concern it could become a pretext for U.S. efforts to keep out its goods.

By using the term in written response to Senate Finance Committee question, Geithner broke a taboo of the Bush administration and increased expectations that the United States would formally cite China for currency manipulation in a semi-annual report due out in April.

But Gibbs indicated it was still an open question whether the Obama administration would cite China or not. "Every administration since 1989 has had to make a determination about currency each spring ...I think it's safe to say that this administration, like the others, will determine in the spring what that means," Gibbs said.

• Geithner's Critics Hoping He Has Answers

"We have to take a comprehensive approach to enhancing our economic relationship with China, including the currency issue," Gibbs said.

China denied Friday that it was manipulating its currency, Agence France Presse reported, reacting to remarks made by U.S. President Barack Obama's nominee for Treasury secretary a day earlier.

"The Chinese government has never used so-called currency manipulation to gain benefits in its international trade," AFP reported the Chinese Commerce Ministry as saying in a faxed statement.

The ministry also lashed out at "unsubstantiated criticism," saying it could risk a protectionist backlash in the United States, AFP reported.

The Chinese ministry also told AFP it intends to maintain "the basic stability of the exchange rate," adding "we will not rely on depreciation to support exports." U.S. Treasury officials and members of Congress have long criticized China for keeping its currency, the yuan, undervalued, saying this undermines U.S. trade competitiveness by making Chinese goods artificially cheap.

But the George W. Bush administration avoided branding Beijing a currency manipulator, instead opting to urge authorities there to adopt a more flexible exchange rate. The dollar has weakened by about 16 percent against the yuan since China revalued it in mid-2005, according to Reuters data.

Chinese anger at Geithner's choice of words. "President Obama—backed by the conclusions of a broad range of economists—believes that China is manipulating its currency," Geithner wrote. Chinese officials have accused the United States of regulatory failings that sparked the meltdown.

When Henry Paulson, former U.S. Treasury chief, said that the high Chinese savings rate had helped sow the seeds of the crisis, a firestorm of criticism ensued in China.

But Yi Xianrong, a finance professor at the Chinese Academy of Social Sciences, said such concerns were premature.

"They will not take the remarks very seriously," Yi said, referring to the foreign ministry and central bank. "We will only try to understand their real stance via diplomatic channels," he added. "If they really resort to diplomatic tactics to intervene, we will take measures to respond."

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