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CHINA RESPONDS TO OBAMA'S NEW TREASURY SECRETARY
Chinese Premier Wen identifies U.S. as...
the major causes of the crisis, which he put down to “inappropriate macroeconomic policies of some economies and their unsustainable model of development, characterised by prolonged low savings and high consumption; excessive expansion of financial institutions in blind pursuit of profit; lack of self-discipline among financial institutions and ratings agencies and ensuing distortion of risk information and asset pricing; and the failure of financial supervision and regulation to keep up with financial innovations, which allowed the risks of financial derivatives to build and spread”.
In contrast, Mr Wen said Chinese banks were well run and had maintained capital reserves above internationally mandated requirements.
His comments served as a reply to controversial claims by the newly appointed US Treasury Secretary, Timothy Geithner, that China was “manipulating” its currency by artificially holding down its value against the US dollar and supposedly swelling the US trade deficit.
Mr Geithner’s call for China to appreciate its currency was savaged by the chairman of Morgan Stanley in Asia, Stephen Roach, who described it as “horrible advice given to the Chinese”.
