As negotiators tackle big topics such as trade, North Korea and currency, which lie at the heart of the sometimes tense U.S.-China relationship, observers are waiting to see whether Geithner’s four years of intensive dialogue with Beijing will pay off.
Geithner, citing important gains made in earlier discussions, has said he will press for long-sought changes to China’s financial system. Chief among the bright spots, according to the Treasury chief and many observers, has been progress toward closing the yawning trade deficit between the two countries. U.S. exports to China have almost doubled since the beginning of Obama’s term.
Even the issue of getting China to stop pegging its currency to the dollar — a major source of tension a few years ago — has receded somewhat, as the value of China’s yuan has moderately increased against the U.S. dollar.
Geithner has “kind of lowered the volume on the currency [issue] and used less inflammatory language, and yet he’s been firm,” said Nicholas R. Lardy, the Anthony M. Solomon senior fellow at the Peterson Institute for International Economics. “He’s managed the issue in a difficult environment.”
U.S. business leaders view this round of talks as a prime opportunity. Advocates of reform within the Chinese government are speaking up, they said, and the mood is positive following the recent visit to the United States of future leader Xi Jinping.
“No other country presents China’s particular mix of opportunities and challenges,” Geithner said last week in a speech to the Commonwealth Club in San Francisco. The Obama administration, he said, has made “significant progress” on its goals.
U.S.-China Business Council President John Frisbie said American companies are hoping the Chinese will agree to open discussions on a bilateral investment treaty that would allow foreign investors to take full ownership of Chinese firms.
As it stands, there are dozens of types of companies in China whose ownership is limited, forcing automakers into joint ventures in which they can own only 50 percent, for example, and capping ownership by securities firms at 33 percent.
“There is positive momentum in terms of the overall tenor and tone of the conversation,” Frisbie said. “We want to see if they are serious about putting ownership limits on the table.”
On security issues, the United States is continuing to press the Chinese for help in discouraging Iran and North Korea from developing nuclear weapons, and there have been signs the Chinese are listening.