U.S. President Barack Obama and his Chinese counterpart Hu Jintao on Tuesday discussed sanctions against Iran and currency rebalancing on the sidelines of the ongoing Nuclear Security Summit, according to National Security Council Senior Director For Asian Affairs Jeff Bader.
During a conference call after the meeting, Mr. Bader said: “On non-proliferation much of the discussion … focused on Iran. The Chinese very clearly share our concern about the Iranian nuclear programme.” He said the U.S., China, and other members of the P5+1 were united in the dual-track approach to the Iran nuclear issue.
In that context, both Presidents reportedly agreed to instruct their delegations to “work with the P5+1 and United Nations Security Council representatives on a sanctions resolution”, said Mr. Bader. He said “the Chinese are actively at the table in New York in discussions with Ambassador [to the United Nations Susan] Rice, as well as the other P5+1 countries and this was “a sign of international unity on this issue”.
However, asked whether the Chinese actually gave their commitment to some form of sanctions or agreed to anything specific, Mr. Bader said: “The two Presidents agreed that the two delegations should work on a sanctions resolution in New York, and that's what we're doing. We have started to work [on] that and we are going to be working on that in the coming days and weeks.” He added that Mr. Obama, in the meeting, made clear the sense of urgency, and the Chinese President made clear that China was prepared to work with the U.S.
Touching upon an issue that has proved to be contentious in recent months, Mr. Obama reaffirmed his view that for a global, sustained and balanced economic recovery it was important that China move toward a more market-oriented exchange rate. Mr. Bader said: “The President also noted his concern over some market access issues, market access barriers, in China and the need to address them as part of the rebalancing effort.”
Declining to comment on whether the specific question of the postponed deadline for labelling China as a “currency manipulator” came up in the discussion Mr. Bader only said, “The rebalancing issue was discussed.” Initially, the report describing China as a currency manipulator was expected to be released on April 15.
Earlier this month, Treasury Secretary Tim Geithner said: “I have decided to delay publication of the report to Congress on the international economic and exchange rate policies of our major trading partners due on April 15.” He argued that there was going to be a series of key high-level meetings over the next three months that would be critical to introducing policies for a “stronger, more sustainable, and more balanced global economy”.
Mr. Geithner specifically alluded to the G-20 Finance Ministers and Central Bank Governors meetings in Washington later in April, the Strategic and Economic Dialogue with China in May, and the G-20 Finance Ministers and Leaders meetings in June. He added, “I believe these meetings are the best avenue for advancing U.S. interests at this time.”
In a statement, Mr. Geithner, however, clearly hinted at the U.S.'s growing concern over its trade deficit with China the role of the Chinese currency exchange rate in maintaining that deficit. He said that though surplus economies with inflexible exchange rates contributed to high growth in the aftermath of the global recession, at this time economic rebalancing was necessary, and it could be achieved through a combination of policies to strengthen domestic demand with greater exchange rate flexibility.
“This is especially true in China,” Mr. Geithner said, adding that “China's continued maintenance of a currency peg has required increasingly large volumes of currency intervention… [and its] inflexible exchange rate has made it difficult for other emerging market economies to let their currencies appreciate.”
In late March, 130 members of the U.S. House of Representatives in a letter pressed White House to declare China as a currency manipulator; they also urged the Department of Commerce to impose sanctions on China on the grounds of “unfair trade practices”. In addition, reports said “14 senators unveiled legislation calling for stiff trade sanctions against China if it does not let the Yuan rise in value against the dollar.”
In turn China had rejected pressure from the U.S. Congress and reportedly “accused Washington of trade protectionism that Beijing said could hurt the global economic recovery”.