US Treasury Secretary Timothy Geithner was in Beijing for a two-day summit in early June. Observers said it represented a continuance of the Obama administration’s singular economic engagement with China.
"It’s notable that even before [Geithner’s trip], Secretary of State Clinton said that the significance of the relationship is an economic one and the relationship between the two powers has been approached that way," said Glenn Maguire, chief Asia-Pacific economist at Société Générale.
Indeed, human rights barely appeared on the agenda, despite a visit to China by US House speaker and China critic Nancy Pelosi, ahead of the summit.
Currency issues were at the forefront of Geithner’s mind in Beijing. He called for greater exchange-rate flexibility – i.e. faster renminbi appreciation – stressing how such a policy supports China’s ambitions to develop domestic demand. But as much if not more time was spent appeasing Chinese concerns about the US dollar, specifically that the Obama administration is threatening the value of China’s US Treasuries by issuing huge amounts of new debt.
"[There was] considerable toning down of the rhetoric," Maguire said. "He was hat in hand, and more appropriately struck a conciliatory tone." While Maguire notes that this did little to advance the countries’ Strategic Economic Dialogue (SED), he admits that Geithner’s approach may have been exactly was needed.
According to Wang Tao, chief China economist at UBS, Geithner’s pacifying tone might have also accomplished one of his main objectives: to set the stage for the next installment of the SED scheduled for July. "First you find the areas of common ground and then you address the more divisive issues," she noted.