Photo: Wikipedia

With the world in the throws of an economic crisis it is important that we do not over look one of the strangest reasons behind it all. Debate both in China and the USA has centered around the money owed to China by the US and how this might change the way the two countries interact, not to mention the global business climate.

Both the United States and China share common interests in a stable international financial system and the policy adopted by China is providing a very stabilizing role in the system, Secretary of Treasury Timothy Geithner said during his visit to Beijing on Monday.

Geithner made the remarks at a news briefing held in the running-up to the Group of 20 (G-20) financial summit scheduled to be held in London on April 2.

Responding to a question about the upcoming meeting between Chinese President Hu Jintao and U.S. President Barack Obama in London on April 1, Geithner said "The (U.S.) president said it is very important for the United States that we have a very productive, close relationship on the economic and financial front with China."
He said the Obama administration is committed to such a relationship with China.

"We share a huge interest together in a stable, well-functioning and smooth international financial system. China is playing an enormously important role now. And its policy is providing a very stabilizing role in the system," he said.

"That's very important for the world economy as a whole. I think we'll see both presidents underscore commitment that the relations are going forward," the secretary said.

Asked what the U.S. is expecting of the G-20 meeting in London, Secretary Geithner said the U.S. basically has two agendas: the recovery agenda and the reform agenda. Specifically, he listed some key objectives to be pursued by the U.S. at the London gathering aimed to tackle the ongoing global financial crisis and economic downturn.

According to the secretary, the U.S. will renew its commitment to coordinated and comprehensive action to boost demand and jobs and to take whatever action is necessary until growth is restored.

It will act forcefully to fix the financial system to get lending moving again and ensure that all systemically-important financial firms and products are subject to strong oversight.

The U.S. will also hope to take action to strengthen international standards for weakly-regulated jurisdictions in the prudential, tax haven, and money laundering areas and adopt a robust international regulatory framework to prevent crises of this kind from occurring again.

Photo: Xinhua

The secretary said that discouraging protectionism and economic nationalism is also one of the key objectives of the U.S. at the summit.

"It's very important to reconfirm our commitment to avoid protectionism and commitment to an open trade policy," he said.

Addressing another question from a reporter, Geithner reiterated U.S. position in support of a strong U.S. dollar.

"The policy of the United States is a strong dollars is in the interests of the United States," he said. "I believe the dollar will be the principle reserve currency for a very long time to come."

"I think our challenge together is trying to make sure each of us is putting in place policies that will help strengthen our production capacity and our economic fundamentals to make sure that as we move to support recovery, we are doing so in a framework that puts our fiscal position back to into balance," he said.

Only time will tell as to what the outcome of the financial crisis is for US-China relations. One thing is for certain, however, the US needs China just as much as China needs the US. The biggest question being, who will come out of this on top?

What do you think should be the US position on relations with China? Feel free to leave your comments at the bottom of this article.

See the article in its original form at Xinhua

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