US tells China to look to its own consumers

US Treasury Secretary Tim Geithner called for a "more open market based economy" in China

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US Treasury Secretary Tim Geithner has called on China to rely more on its own spending and less on exports.

"The challenge is to lay the foundation for a new growth model, driven more by domestic demand," he advised his Chinese counterparts.

His comments came at the start of a two-day bilateral summit on security and the economy in Washington.

US officials and many economists say Beijing depends unfairly on a cheap currency to boost exports and growth.

However, Chinese commerce minister, Chen Deming, responded by telling reporters that "the West's fears and worries about China's [yuan] exchange rate are unfounded because over the past three years China's trade surplus has continuously dropped".

Analysis

Vice-President Joe Biden and Secretary of State Hillary Clinton were unusually blunt in their criticism of China's human rights record with top Chinese officials sitting in the room.

Mr Biden spoke of vigorous disagreement on the issue, Mrs Clinton expressed concern about lawyers and writers being detained or "disappeared".

The Obama administration has raised the issue intermittently, sometimes in public, mostly in private, but never quite like this.

That's because of the Middle East - China's crackdown is in some ways unprecedented; Beijing is worried the so-called Arab Spring will inspire its own people.

But it's also with an eye on the unrest in the Middle East, and the considerable headaches it's causing the US, that Mrs Clinton said Washington worried about how the Chinese crackdown would impact US domestic politics and the stability of China.

She added that history had shown that societies that respected human rights were more prosperous.

China's currency and America's debt will also dominate the agenda.

There's never really that much progress or any big announcements. The annual meeting is mostly designed to help manage tensions between them and keep the conversation going.

The heads of 16 US government agencies and representatives of 20 Chinese government departments will discuss the most difficult issues in a complex, interdependent relationship.

The annual Strategic and Economic Dialogue comes just four months after bilateral discussions between US President Barack Obama and China's President Hu Jintao.

Mr Geithner also said that China should develop "a more market-based economy and a more sophisticated financial system".

In a largely upbeat opening address, he claimed that the two countries' reform needs were "not in conflict".

'Vigorous disagreement'

Meanwhile, at the separate diplomatic track of the twin-track summit, both US Vice-President Joe Biden and Secretary of State Hillary Clinton criticised China's recent clampdown on opposition activists.

"We have vigorous disagreement in the area of human rights," said Mr Biden.

The two pointed out the numerous arrests of activists, journalists and critics by the Chinese government, in an apparent attempt by Beijing to preempt any Egyptian-style protest movement.

It is not thought any concrete results will emerge from this meeting, according to the BBC's Caroline Hepker in New York. Rather, each side is hoping to influence the other's point of view.

"That has meant a string of statements and briefings on issues from the yuan exchange rate to protectionism, America's budget deficit and China's human rights record from leaders on both sides," she said.

"But China makes its own claims of discrimination. Beijing argues the US imposes restrictions on Chinese investment in the US using the cloak of national security concerns."

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