BEIJING - US TREASURY Secretary Timothy Geithner said on Monday that the global recession seemed to be losing force but that it will be critical for the United States and China to institute major economic reforms to put the world on a more sustained footing.
Geithner said that a successful transition to a more balanced and stable global economy will require substantial changes to economic policy and financial regulation around the world and especially in the world's largest and third largest economies.
Geithner had extensive praise for the economic transformation China has achieved and avoided emphasizing past trade disputes such as the aggressive campaign waged by the Bush administration to force China to move faster to allow its currency, the yuan, to rise in value against the dollar.
American manufacturers see the undervalued yuan as a primary culprit in the soaring trade deficits the United States has with China, deficits that critics contend have played a major role in the loss of millions of American manufacturing jobs.
Geithner struck a positive note on the global economy, noting a number of signs in the United States that the huge plunge in activity that occurred last year when the financial crisis struck with force had started to slow.
Geithner said the necessary reforms will include getting the U.S. budget deficit under control once the recovery is firmly in place, something he said the Obama administration was committed to doing.
He said China will need to strengthen its social safety net in such areas as pensions and health care so that the Chinese will feel more confident about spending more. That is viewed as critical if China is going to transform from an export-driven economy into one driven more by domestic consumption, a change that Geithner said was essential to assuring balanced world growth in the years ahead.
Geithner sought to reassure the Chinese on the issue of getting control of the exploding U.S. budget deficit. -- AP