US praises China's efforts in recovery

US Treasury Secretary Timothy Geithner praised China for boosting domestic demand to support the recovery of the world economy on Friday.

"There has been a very, very substantial effort (on the part of China) to provide financial measures to promote recovery," Geithner said.

"The trade surplus is coming down and domestic demand is getting stronger, and that's a good sign of the shift."

Geithner said he is aware of the commitments China has made to its own citizens, such as relying less on exports and government investment, and focusing more on spurring domestic consumption.

"These are encouraging signs," Geithner said.

He said he expects China to move forward with reforms because in the last 30 years, "China has set an exceptionally good record acting on its commitments and delivering them".

Rebalancing the global economy is a critical issue during the current G20 summit. The United States has been pushing for a deal to promote "balanced growth". It is encouraging countries, especially China, to rely less on US consumers for growth and more on domestic consumption.

At the current G20 summit, Geithner expressed optimism that "we are going to leave Pittsburgh with an agreement among all the members of G20," thanks to China's support.

The Sino-US Strategic Economic Dialogue in Washington in July "put in place the foundation" for an agreement among G20 states, he said.

Imbalanced world economy

Ma Xin, an official with the National Development and Reform Commission, the country's top economic planning organization, on Friday rejected the claim that China's high savings rate should be blamed for the global financial crisis.

Lowering the country's saving rate will not solve the world's economic problems, he said.

"There indeed is an imbalanced world economy, but it takes on many forms, such as imbalances in wealth distribution, development, and international payment," Ma said at the G20 summit.

"You could not expect the rise in one particular country's savings rate to solve all the problems related to an imbalanced world economy."

Ma said he has taken note that the savings rate in the US has been rising, and he called it a correction of that country's old model of development based on over-consumption.

"Each country has its own problems. Our problem is low consumption. But it may not have any linkage to the global economic crisis," he said.

Some US economists think that Sino-US trade imbalance contributed to the financial meltdown, by allowing China to accumulate dollars that helped fuel the housing and stock price bubbles.

(2009-09-26)