Tags: geithner | deficit | china

Geithner: Deficit Under Control in Four Years

By Forrest Jones   |   Tuesday, 28 Jul 2009 10:08 AM

Treasury Secretary Timothy Geithner pledged to rein in the U.S. deficit in four years as China voiced concern about preserving the value of its $801.5 billion of Treasury holdings.

The U.S. will ensure a “sustainable” deficit by 2013, Geithner said at the beginning of the first round of Strategic and Economic Dialogue talks under President Barack Obama in Washington.

The two economic superpowers are meeting to discuss economic issues, with Beijing concerned about the worth of its dollar-denominated holdings and Washington concerned with the China's currency that skews trade in its favor. Tensions, Bloomberg News reported, were not very high.

That may be because the “best idea is just to keep the yuan-dollar rate stable” given U.S. need for Chinese demand for Treasuries, said Ronald McKinnon, a professor of economics at Stanford University.

“The Chinese are trapped with supporting the value of the dollar,” McKinnon told Bloomberg.

“If they withdrew from the market, there’s a big appreciation” of the yuan as a result that would send China’s exports down, he said.

Geithner also said that China can help restore global growth by continuing to encourage more consumption at home and exporting less, Reuters reports.

China should also recognize that cash-strapped U.S. consumers can't keep powering the global economy.

"China's success in shifting the structure of the economy towards domestic-led growth, including a greater role for spending by China's citizens, will be a huge contribution to more rapid, balanced and sustained global growth," Geithner said.

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Treasury Secretary Timothy Geithner pledged to rein in the U.S. deficit in four years as China voiced concern about preserving the value of its $801.5 billion of Treasury holdings. The U.S. will ensure a “sustainable” deficit by 2013, Geithner said at the beginning of the...
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2009-08-28
 

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