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U.S. Treasury Secretary Geithner: China is helping stabilize world economy
U.S. Treasury Secretary Geithner, who will visit China at the end of the month, testified in Congress on the 20th that China's policy measures have played a very important stabilizing role in this round of the worst global recession in decades. He also reiterated in response to questions from some lawmakers that China's reform of the exchange rate mechanism in the past few years has achieved remarkable results. Regarding the acquisition plan of 'toxic assets' in the banking industry concerned by the outside world, Geithner revealed that the 'public-private investment project' jointly established by the US government and the private sector will start running in the next 6 weeks to purchase related problem assets. Support China's economic policy In the question and answer on the 20th, Geithner supported China's exchange rate and economic policy, and said that the Ministry of Finance did not list China as a 'currency manipulator' country before. When Congress confirmed his nomination for Treasury secretary in January this year, Geithner said in a written statement that U.S. President Barack Obama believed that China was 'manipulating' the yuan's exchange rate, and he would urge China to change its exchange rate practices. But after that, the White House's stance on the yuan exchange rate changed abruptly. In its semi-annual report to Congress on March 15, the U.S. Treasury Department said that nearly all of the U.S. trading partners have been hit by the current global recession, but that the Treasury Department has not identified any country or economy manipulating its exchange rate to make Domestic trade benefits, including China, of course. In testimony before the Senate on Wednesday, Geithner once again explained the above-mentioned practice of the Treasury Department. He said that China has allowed the renminbi to appreciate sharply and has continued to promote market-oriented reforms. Geithner said that looking back over the past two years, China has achieved remarkable results in the reform of the exchange rate mechanism, and the US government is also pleased to see such progress. Some congressmen claimed that the appreciation of China's exchange rate was not enough, but Geithner did not respond positively. He said the Obama administration would like to see China continue to push forward exchange rate reform. 'But in any case, what China is doing now is playing a very constructive and stabilizing role, especially when the global economy is going through the worst recession in decades.' Geithner warned Senators them. According to preliminary arrangements, Geithner plans to visit Beijing on May 30, and plans to hold a series of high-level meetings on June 1-2. The Treasury Department said Geithner's trip will 'discuss a range of topics of importance to both countries, including strengthening China-U.S. economic and trade ties and promoting stable, balanced and sustainable economic growth in both countries.' Start a public-private buyout fund within 6 weeks Geithner also briefed Congress on the Obama administration's bailout of the financial industry. He revealed that a 'public-private investment program' jointly set up by the government and the private sector will start operating in the next six weeks to buy 'toxic assets' that clog the US banking system. It is reported that officials of the Ministry of Finance are selecting a suitable fund manager among more than 100 applicants, and the selection process will be completed soon. The Treasury Department, along with the Federal Reserve and the Federal Deposit Insurance Corporation, will begin running the program within the next six weeks. The 'Public-Private Investment ProgramThe government will contribute $75 billion to $100 billion for the project, which will be used along with private investment to buy $500 billion of such assets, which could eventually expand to $1 trillion. The Obama administration believes that the new approach to public-private partnerships is a better option than financial institutions' own 'cleansing' or the government's direct purchase of 'toxic assets.' The gradual clean-up of 'toxic assets' by financial institutions may lead to a prolonged financial crisis; if the government buys 'toxic assets' outright, taxpayers will bear all the risks. Financial markets begin to 'heal' Geithner once again expressed optimism for the financial sector, saying that the recent stress tests of the banking sector had significantly boosted confidence in the financial system. To date, the 19 large U.S. banks that have undergone the stress test have raised more than $56 billion, including $34 billion in common equity capital. Of the $56 billion, about $48 billion was raised by banks that regulators deem lacking capital, Geithner said; those that are not, have begun to say they plan to repay the government's bailout money. Geithner also said the economy has shown welcome signs that financial markets are finally starting to heal. He also provided Congress with an update on the accounts of the $700 billion Troubled Asset Relief Program (TARP). A chart accompanying Geithner's written testimony showed that the Treasury Department estimated the remaining funding for TARP at $123.7 billion, including about $25 billion in repayments the Treasury expects to receive.