Trade in China

WASHINGTON — Timothy Geithner’s first trip to China as treasury secretary comes during a vulnerable time for the Obama administration.

Mired in a brutal recession, the U.S. needs Beijing to buy more American goods, allow its currency to rise and make other moves to narrow an enormous trade gap. The U.S. also needs China’s help to confront any military threat from North Korea.

Yet Washington’s leverage has waned just as China’s power over the U.S. has grown.

China is now America’s biggest creditor. As of March, it held $768 billion of Treasury securities — about 10 percent of publicly traded debt.

The U.S. needs China’s money to finance U.S. budget deficits, which are soaring as Washington tries to end the recession and bolster the banking system. The administration estimates the budget deficit will hit $1.84 trillion this year.

Geithner, who left Saturday for meetings Monday and Tuesday with Chinese leaders, carried a goal of persuading the Chinese government to adopt policies that would transform its nation of savers into spenders.

The U.S. wants Beijing to rely more on domestic spending and less on exports to power the global economy. Experts say the shift would help rebalance world trade.

It also could hasten an end to the global recession and narrow America’s trade gap because the Chinese would buy more American products.



by the associated press