US may ditch twice-yearly talks China

US may ditch twice-yearly talks China
Strained relations between the US and China are likely to increase in the coming months as a number of senior officials in President Barack Obama's administration are believed to be keen to axe bi-annual economic meetings between the two superpowers.

By James Quinn in New York and Malcolm Moore in Shanghai
Last Updated: 6:03AM GMT 26 Jan 2009

The meetings – known as the US-China Strategic Economic Dialogue (SED) – are unlikely to continue in their current form under the Obama administration, which is understood to favour more proactive and honest communication, rather than what it perceives to be twice-yearly "talking shops".

In their place, President Obama's team, including US Treasury Secretary-designate Tim Geithner, are thought to prefer more proactive, less staged dialogue which will lead to actual agreements on economic policies. One criticism of the meetings, the most recent of which was in Beijing in December, was that though bold in aspirations, they achieved little.

Mr Geithner, however, who served as under-secretary of the Treasury for international affairs in the Clinton administration, is more than aware of the need to keep talking to China.

He learned Chinese as a student, and has lived in the country, as well as nearby Japan and Thailand.

Although last Thursday he made comments regarding the Chinese currency, the yuan – which he said the country's government was manipulating in order to boost exports – Mr Geithner is not so foolish as to risk rocking the boat with the Hu government, given he needs
it to keep buying US securities in order to fund its recovery.

The Chinese for their part, first "noted" Mr Geithner's comments, but later refuted them.

The Chinese government owned $682bn (£494bn) of US government debt at the end of November, overtaking the Japan as the biggest foreign owner of the bonds late last year.

A US Treasury spokesman did not comment.