China 'crucial' to global recovery

China's role is "crucial" to reversing the global economic downturn, the US treasury secretary has said.
Speaking in Beijing on Monday, Timothy Geithner said a joint effort with the world's third largest economy to implement major economic reforms would contribute to a global recovery.
"How successful we are in Washington and Beijing will be critically important to the economic fortunes of the rest of the world,'' he said in a speech at Peking University, where he had studied Chinese more than 20 years ago.
"Our common challenge is to recognise that a more balanced and sustainable global recovery will require changes in the composition of growth in our two economies." Geithner said necessary reforms included getting the US budget deficit under control once the recovery was in place, a policy he said the Obama administration was committed to achieving.
He also said China would need to strengthen its social safety net in areas such as pensions and healthcare in order for local residents to feel confident about spending more.
Geithner stressed the importance of China transforming from an export-driven economy into one driven more by domestic consumption, a change he said was essential to assuring balanced global economic growth in the years to come. On his first trip to China as treasury secretary, Geithner is expected to pursue closer economic ties with Beijing and try to calm concerns about the increase in US borrowing when he meets Chinese leaders in Beijing on Monday and Tuesday. In March, Wen Jiabao, the Chinese premier, had said that having "lent a huge amount of money to the US, of course, we are concerned about the safety of our assets".
At the time, China held $768bn of US treasury securities, about 10 per cent of the country's publicly traded debt.
Geithner had told reporters on his way to Beijing that he wanted to foster the same kind of working relationship with China that the US enjoys with major European economic powers.
Praising China's economic successes, Geithner also avoided emphasising past trade disputes with the country such as the aggressive campaign waged by the Bush administration to press China to move faster to allow its yuan currency to rise in value against the US dollar.
US manufacturers who say the yuan is deliberately undervalued see it as the main reason behind the soaring trade deficits the US has with China, deficits that some say have played a major role in the loss of millions of American manufacturing jobs.