Geithner Defers Action To Label China a Currency manipulator

The U.S. policy makers have postponed a decision on whether to label China a currency manipulator.

Any contention between the U.S. and China from trade imbalance to currency manipulation may need to be understood in the broader context of their policy undertakings and their consequences such as China’s industrialization and expansion processes and the U.S.’s credit-fuelled overconsumption.

Why has China bought the U.S. treasuries in the first place and why are they buying less? In exchange for being the biggest lender to the U.S., what has China gained? Who is benefiting most from this process?

It appears that the U.S. can’t just blame China for its systemic failure, resulting in the loss of the productive economy.

From Bloomberg:

U.S. Treasury Secretary Timothy F. Geithner delayed a scheduled April 15 report to Congress on exchange-rate policies, sidestepping a decision on whether to accuse China of manipulating the value of the yuan.

Geithner in a statement yesterday urged China to move toward a more flexible currency and said a series of meetings over the next three months will be “critical” to bringing policy changes that lead to a stronger, “more balanced” global economy. The delay comes as Chinese President Hu Jintao is scheduled to visit Washington for a nuclear summit April 12-13.

The Treasury chief faces demands from Congress to label China a currency manipulator for keeping the value of the yuan little changed from about 6.83 to the dollar for almost two years. Geithner is instead betting that China will take steps on its own in the next several months to strengthen its currency, analysts said.

http://www.bloomberg.com/apps/news?pid=20601087&sid=azQRzn_a9eP8&pos=1