US won't give China "free pass" on currency

Jan 22, 2009, 17:14 GMT

Washington - US Treasury secretary-designee Timothy Geithner on Thursday said he believed China was deliberately keeping its currency devalued and signalled the new Obama administration would not give China a 'free pass' to keep its trading advantage.

'President Obama - backed by the conclusions of a broad range of economists - believes that China is manipulating its currency,' he said Thursday, in written responses to questions from the Senate Finance Committee.

'Countries like China cannot continue to get a free pass for undermining fair trade principles,' Geithner said, but did not offer specific details on how President Barack Obama would tackle the issue.

The US in a long-running dispute has argued that China's yuan currency is undervalued by as much as 30 per cent, giving the country an unfair trade advantage for its exports over the United States.

Obama has been a critic of China's currency in the past, sponsoring resolutions in the Senate that would have authorized new US enforcement mechanisms against China and other countries deemed to hold unfair trade advantages.

Geithner said the US relationship with China, the world's third largest economy, represented 'significant challenges but also opportunities' and pledged continued cooperation with the Chinese government.

He said the new administration was working on an 'integrated strategy' to work with China on redressing the trade imbalance.

Geithner has yet to be confirmed by the Senate as US Treasury secretary. The finance committee approved his nomination Thursday. The full Senate could hold its own vote later this week.