Geithner: China's Yuan Changes Are Very Promising
STEVE INSKEEP, HOST:
Now let's go from the Chinese auto market to Chinese currency. For years now, American companies and the U.S. government have complained that China purposely undervalues the U.N. to maximize exports. But as NPR's John Ydstie reports, Treasury Secretary Timothy Geithner actually has offered some praise to China for making its currency more responsive to market forces.
JOHN YDSTIE, BYLINE: Geithner's comments came in response to a question about China's move late last week to loosen controls on its currency and let it float in a slightly broader band against the dollar. The treasury secretary was surprisingly positive.
TIMOTHY GEITHNER: I think the cumulative effect of what China has done on the exchange rate side is - and the external side - is very significant and very promising.
YDSTIE: Geithner went on to point out that China's trade surplus has declined significantly as the value of its currency has risen by 14 percent against the dollar in just the past two years. It strengthened even more over the past seven years.
GEITHNER: If you look back relative to 2005, it's more like 45 percent. Pretty significant adjustment in real terms.
YDSTIE: A stronger currency makes the country's products less competitive in world markets, and Geithner said he was encouraged that the progress is continuing, even during a transition of political power in China. But the treasury secretary said China still has a long way to go to get its currency to the right level and make its economy less dependent on exports and more focused on internal consumption. John Ydstie, NPR News, Washington.
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