In Talks With the Chinese, Geithner Faces an Uphill Climb

Timothy F. Geithner, the Treasury secretary, came to Beijing on Tuesday hoping to persuade Chinese leaders to toughen their stance toward Iran and to soften their opposition to a stronger renminbi, a move that could help the American economy.

By many accounts, including some from the Chinese, his odds of success on those issues are long. But on other topics, like the need to address Europe’s debt problems, the two sides may find more agreement.

Mr. Geithner, the point man for the Obama administration’s economic dealings with the Chinese, arrived here as fiscal and trade relations showed signs of fraying. Last month, the Chinese applied stiff tariffs on imports of American automobiles, and in November, they opened an investigation into American subsidies to renewable-energy industries.

On the American side, President Obama left China out of a trade pact with East Asian countries, the Trans-Pacific Partnership, that he announced in November. Washington is investigating or formally pursuing trade complaints on a range of goods, including solar panels, broiler chickens and steel pipes.

Mr. Geithner’s arrival coincided with a report that Mr. Obama was creating an interagency task force to search for unfair trade and business practices by the Chinese. That report, in The Wall Street Journal on Tuesday, said that Mr. Geithner would brief Chinese officials on the task force during his visit here.

American corporations in industries like telecommunications and financial services have increasingly complained that China continues to restrict their access to domestic markets, despite pledges of openness when China joined the World Trade Organization a decade ago.

Differences aside, the economic relationship between the two countries has become so broad that Mr. Geithner and his counterparts are expected to find common ground.

In meetings on Tuesday and Wednesday with Premier Wen Jiabao; Vice President Xi Jinping; and Wang Qishan and Li Keqiang, vice premiers, the two sides are expected to focus on ways to keep Europe’s debt crisis from dragging the global economy back into recession.

At the first meeting Tuesday evening, Mr. Wang alluded to the global role facing the United States and China, saying the countries were “having important cooperation in the multilateral and global arena in the areas of economy, finance, trade policies and also G-20 related affairs.”

The visit also offers a chance for a meeting with Mr. Xi, the presumed successor to President Hu Jintao, before Mr. Xi travels to the United States this year.

Yet Mr. Geithner seems unlikely to gain many concessions on the two top issues for this visit: the valuation of the renminbi and American efforts to impose new financial sanctions on Iran’s nuclear program.

The United States has long complained that China keeps the renminbi artificially low to give its products a price advantage in foreign trade. China has allowed a slow appreciation of its currency against the dollar — in unadjusted terms, a gain of nearly 4.8 percent against the dollar in the last year, according to the Bank of China.

But some American economists say the renminbi would appreciate another 10 to 20 percent if the market set its value. The Obama administration said in December that China’s currency remained “substantially undervalued,” but it declined to call China a currency manipulator.

Mr. Geithner is sure to raise the issue of the renminbi this week. But he is unlikely to get a sympathetic hearing, said Li Xiangyang, the vice director of the Institute of World Economics and Politics at the state-run Chinese Academy of Social Sciences.

“Other currencies are dropping against the U.S. dollar right now,” he said in an interview. “The United States has no right to ask China to appreciate its currency when the global trade is declining and China’s economy itself is facing the risk of decline.”

Mr. Geithner faces an equally hard task on the Iranian issue. In the last week, President Obama signed legislation that would deny foreign financial companies that buy Iranian oil access to the American financial system. Those sanctions aim to increase pressure on Iran to curtail what many say is an effort to build nuclear weapons.

The European Union is moving toward a ban on buying Iranian oil, and Japan and South Korea, two of Iran’s major customers, have indicated muted support for the Washington initiative. Mr. Geithner will seek to enlist China’s help, too.

But on Monday, a senior Beijing diplomat seemed to suggest that that idea had no chance of succeeding. The diplomat, the vice foreign minister, Cui Tiankai, repeated China’s argument that differences over Iran’s nuclear intentions “cannot be resolved by sanctions alone” and require more negotiations.

Mr. Cui dismissed the notion that China should try to sway Tehran by reducing or ending its purchases of Iranian oil or natural gas. “Regular economic and trade relations between China and Iran have nothing to do with the nuclear issue,” he said. “We should not mix issues with different natures.”

China bought more than 11 percent of its oil imports from Iran in the first 11 months of 2011, up from 9.6 percent in the same period in 2010, Chinese customs statistics show. The Chinese also have a thriving business in oil services in Iran, having committed $120 billion to oil and gas projects there as of 2009, according to published reports.

China has historically been reluctant to support economic sanctions not approved by the United Nations. But its increasing isolation on the Iranian nuclear issue could lead it to take some other measure to meet American requests, like a direct message to Tehran, said François Godement, a senior fellow at the European Council on Foreign Relations.

Mia Li contributed research. Keith Bradsher contributed reporting from Hong Kong.

By , The New York Times,

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