MELISSA BLOCK, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.
MICHELE NORRIS, host:
And I'm Michele Norris.
And first this hour, how China and the U.S. are trying to navigate their way through the global recession. The two economies are deeply intertwined. Tomorrow, Timothy Geithner, the Treasury Secretary, heads to China. He'll take part in high-level talks on the many complicated issues that make up the U.S.-Chinese economic relationship.
As NPR's Tom Gjelten reports, both sides have complaints about the other's policies.
TOM GJELTEN: At the beginning of Timothy Geithner's visit to China, there will be the photo op. He'll sit in a big overstuffed chair, alongside his Chinese counterpart, with a pot of tea between them. Dennis Wilder, who advised President Bush on China policy, knows the routine. He says these first meetings don't often mean much.
Mr. DENNIS WILDER (Visiting Fellow, John L. Thornton China Center): You need translation, and you have very limited time and basically you deliver talking points to each other, which is not a very productive way to go.
GJELTEN: Especially not right now with so many problems to work out. The U.S. and Chinese strategies for economic recovery are in conflict. The United States wants to revive its own manufacturing sector - that means producing more at home, taking in fewer cheap imports from China. It would help if the Chinese allowed their currency to rise in value. Compared to other currencies, that would make Chinese products more expensive and, therefore, less competitive on the world market. But Eswar Prasad, professor of trade policy at Cornell University, says those Chinese export companies are what employ Chinese workers.
Professor ESWAR PRASAD (Trade Policy, Cornell University): Exports are necessary to produce decent job growth, but the only market that they can really look to right now, given the weaknesses in Europe and Japan, is the U.S. market. And if the U.S. starts taking in a lot of imports from China, it sets back the U.S. recovery.
GJELTEN: China meanwhile is concerned about its enormous investment in U.S. government debt, more than a trillion dollars worth. China is worried that big budget deficits in the U.S. will bring inflation, which would lower the value of all those U.S. dollar investments. What makes these discussions so complicated is that both countries basically want to have their cake and eat it too. If Chinese exports go down, which the U.S. wants, China will earn fewer dollars and won't be able to finance U.S. government borrowing as much. That would hurt the U.S. economy right now. Brad Setser of the Council on Foreign Relations says China may be just as conflicted about what it wants.
Mr. BRAD SETSER (Council on Foreign Relations): China wants to peg to the dollar, wants to support its exports, and at the same time, is worried about its exposure to the dollar. Those are conflicting and competing messages. The U.S. wants China to reorient its economy, to export less, to import more, to rely more on domestic demand. But it doesn't want there to be any immediate, abrupt fall in Chinese purchases of U.S. securities, because that would be disruptive in the short run.
GJELTEN: With an agenda this complicated, Timothy Geithner and his Chinese counterparts need to spend some time together. Dennis Wilder says the most important meetings in Beijing next week will be the banquets.
Mr. WILDER: This is where you relax a little bit, you enjoy each other's company, you tell some jokes, you know. Geithner may say, you know, you can't go on forever living off the American marketplace. And the Chinese may say, well, you can't go on running these kinds of fiscal deficits that you've been running.
GJELTEN: In fact, both sides already know the others' concerns. Chinese officials met often with Hank Paulson, President Bush's Treasury secretary, and they know the China issues on the Obama administration's economic agenda. What they don't know, says Dennis Wilder, is how those issues are ranked in order of concern.
Mr. WILDER: The Chinese have gotten very good at reading American officials. So what they will be asking Mr. Geithner, and probably pretty pointedly, is: What are your priorities? We knew what Hank Paulson's priorities were. We don't know you as well as we knew Hank. Yours will be different from Hank's. Give us a sense of where you're going.
GJELTEN: Geithner won't exactly be starting from scratch in these discussions. He attended a university in China, and at one point, actually spoke some Mandarin.
Tom Gjelten, NPR News, Washington.
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