Chinese stocks Surge after Geithner surprise visit to China today.
The chinese Index is up over .55%
Geithner's Message to China: U.S. "Here to Cooperate," Asia Expert Says
by Aaron Task
Related: FXI, PGJ, UUP, UDN, GLD, EEM, TBT
Tim Geithner is heading to China for a "surprise" visit Thursday with Vice
Premier Wang Qishan, just days after delaying a report on whether the U.S. views
China as a currency manipulator. Meanwhile, China sent signals today it will
allow its currency, the renminbi, to float in a wider band vs. the dollar, a
potential first step toward a larger revaluation.
All of this is occurring ahead of Chinese President Hu Jintao's scheduled
meeting next week with President Obama on nuclear security.
If you think this is all a coincidence, I have a dam in China I'd like to sell
Geithner's decision to delay the report was "obviously intended as a signal to
China that we are here to cooperate and ready to work with them on issues of
global rebalancing," says Julian Chang, executive director of the Rajawali
Foundation Institute for Asia at Harvard's Kennedy School. "The administration
wants to show is does value its relationship with China and is ready to move
forward after a period of some tension," most notably over arms sales to Taiwan
and Obama's meeting with the Dalai Lama.
This is going to be a hard pill for many Americans to swallow, including
politicians such as Sen. Chuck Schumer (D-NY) who has pushed successive
administrations to take a harder line with China. Many economists believe China
is keeping its currency undervalued by at least 20%, making Chinese exports more
competitive in a global market at the expense of U.S. manufacturing jobs.
But the stark reality is China is America's largest creditor, holding $889
billion of Treasury securities as of the Jan. 2010 TIC data.
Geithner and Obama using kid gloves with China is, therefore, "a politick move
in terms of international relations, in terms of cementing the relationship
between the U.S. and China, which will continue to be the most important
relationship going forward," Chang says.