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China and US tone down trade spat | China and US tone down trade spat |
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US Treasury Secretary Tim Geithner and a Chinese counterpart have attempted to calm trade tensions at an Asia-Pacific finance ministers' meeting in Japan. | US Treasury Secretary Tim Geithner and a Chinese counterpart have attempted to calm trade tensions at an Asia-Pacific finance ministers' meeting in Japan. |
Mr Geithner dropped an earlier call for G20 countries to adopt a target to reduce their economic imbalances to less than 4% of their output. | Mr Geithner dropped an earlier call for G20 countries to adopt a target to reduce their economic imbalances to less than 4% of their output. |
The policy was seen as targeting China's substantial trade surplus. | The policy was seen as targeting China's substantial trade surplus. |
Meanwhile, China's vice finance minister, Wang Jun, supported the US Federal Reserve's quantitative easing. | Meanwhile, China's vice finance minister, Wang Jun, supported the US Federal Reserve's quantitative easing. |
He said the move would help to boost economic growth in the US, which is important to the global recovery. | He said the move would help to boost economic growth in the US, which is important to the global recovery. |
Defending the Fed | |
This was in contrast to the criticism that has been thrown at the US central bank by many other developing countries, as well as some of Mr Wang's colleagues. | This was in contrast to the criticism that has been thrown at the US central bank by many other developing countries, as well as some of Mr Wang's colleagues. |
China's Vice Foreign Minister Cui Tiankai had previously said that the Federal Reserve had the right to take steps without consulting other countries beforehand, but had added: "They owe us some explanation." | China's Vice Foreign Minister Cui Tiankai had previously said that the Federal Reserve had the right to take steps without consulting other countries beforehand, but had added: "They owe us some explanation." |
On Monday, a Chinese state newspaper - the People's Daily - published a front page opinion piece in its international edition claiming that quantitative easing amounted to currency manipulation - a charge often levelled by US politicians at China - and would lead to a currency war and global economic collapse. | On Monday, a Chinese state newspaper - the People's Daily - published a front page opinion piece in its international edition claiming that quantitative easing amounted to currency manipulation - a charge often levelled by US politicians at China - and would lead to a currency war and global economic collapse. |
Responding to the criticism, US President Barack Obama came out in support of the Federal Reserve's move. | |
"The Fed's mandate, my mandate is to grow our economy," he said, speaking on Monday during a state visit to India. "That is not just good for the United States, that is good for the world as a whole." | |
Free trade area | |
Mr Geithner said the US only wanted "indicative guidelines" for current account imbalances, but added that "it's not something that can reduce easily to a single number". | |
At a G20 meeting of finance ministers in Korea last month, Mr Geithner advocated that G20 countries should aim for 4% of economic output as a "benchmark for the future" for such trade imbalances. | At a G20 meeting of finance ministers in Korea last month, Mr Geithner advocated that G20 countries should aim for 4% of economic output as a "benchmark for the future" for such trade imbalances. |
China's current account deficit is currently 5% of its gross domestic product. | China's current account deficit is currently 5% of its gross domestic product. |
Mr Geithner and Mr Wang were speaking at a meeting of finance ministers from the countries of the Asia-Pacific Economic Co-operation (Apec) forum at Kyoto in Japan. | |
The 21 Apec finance ministers agreed in a communique that countries would "move towards more market-determined exchange rate systems that reflect underlying economic fundamentals and will refrain from competitive devaluation of currencies". | The 21 Apec finance ministers agreed in a communique that countries would "move towards more market-determined exchange rate systems that reflect underlying economic fundamentals and will refrain from competitive devaluation of currencies". |
The ministers also advocated the long-term aim of creating a free trade area to replace the more than 100 bilateral and mini free-trade-area agreements already signed amongst them. | |
"Rather than doing bilaterally or with a small number of countries, free trade deals work better when more countries get involved," said Haruhiko Kuroda, president of the Asian Development Bank. | "Rather than doing bilaterally or with a small number of countries, free trade deals work better when more countries get involved," said Haruhiko Kuroda, president of the Asian Development Bank. |
Apec countries account for 53% of global economic output, and 44% of global trade. Apec heads of government will hold a summit this weekend. | |