I have decided to delay publication of the report to Congress on the international economic and exchange rate policies of our major trading partners due on April 15. There are a series of very important high-level meetings over the next three months that will be critical to bringing about policies that will help create a stronger, more sustainable, and more balanced global economy. Those meetings include a G-20 Finance Ministers and Central Bank Governors meeting in Washington later this month, the Strategic and Economic Dialogue (S&ED) with China in May, and the G-20 Finance Ministers and Leaders meetings in June. I believe these meetings are the best avenue for advancing U.S. interests at this time.The Obama Administration has, thank heavens, blinked.
A declaration by the Treasury that China was a currency manipulator could very well have launched a major trade war. It further signals, though, that China has the upper hand. The U.S. simply needs China to "manipulate" its currency by propping up the dollar through Treasury debt purchases. It can't mess with China.
The only factors China will now consider when it evaluates its monetary policy will be domestic, which now includes a significant pric inflation problem. That alone may be enough for China to slow its propping up of the dollar, but Premier Wen Jiabao is no longer concerned about a Obama instigated trade war. He will couch a domestic inspired revaluation of the renminbi as an attempt at co-operation with Obama, when it will be nothing of the kind.
The full Geithner statement is in the vault.
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