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Geithner Gets It

This blog post was written by CMR Senior Analyst Ben Cavender.

When US Treasury Secretary Timothy Geithner came to Peking University on Monday to discuss the global financial crisis and the steps that the US and China need to take to ensure a stable recovery there was some fear that Geithner would take the wrong tack with China.   

Previously Geithner had done himself no favors in dealing with China making charged comments on currency issues that accomplished nothing and only served to increase tension.  This time though Geithner more or less got it right.  Geithner set a positive tone by reassuring China that the US is taking steps to prevent devaluation of the US dollar, scale back government intervention, and work to encourage US savings.  His suggestion that the Chinese work to become a more consumer driven economy was in line with what the central government was doing anyway. 

Geithner’s trip has the potential to be a coup for US China relations because the Chinese were not forced into a corner or admonished, instead they were given the respect that they deserve for staving off economic crisis in China.  Hopefully this paves the way for future bilateral dialogue.