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Geithner addresses Chinese currency issue
U.S. and Chinese flags hang at the Great Hall of People in Beijing, China.
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TEXT OF STORY
Kai Ryssdal: There will be much pomp and circumstance next week when Hu JinTao arrives in Washington. But the real business of these kinds of visits doesn't actually wait 'til the guest is in town. In a speech this morning, Timothy Geithner mapped out what he calls "the path ahead" for the U.S.-China economic relationship.
First, he repeated what we've heard before from both Congress and the White House, lawmakers of both parties: He wants Beijing to stop undervaluing its currency. But Geithner also covered other, perhaps more important, ways to level the playing field.
From Washington, Marketplace's David Gura reports.
David Gura: Tim Geithner previewed President Obama's pitch: Let more U.S. companies in, and stop stealing intellectual property.
Timothy Geithner: Our priorities in this economic relationship -- from the exchange rate to the protection of intellectual property -- reflect changes that are fundamentally in China's interest.
China is concerned about its lack of homegrown innovation and more competition could spark that.
Geithner: Ultimately, China will need to make these changes in order to promote its long-term prosperity.
Geithner said U.S. exports to China are growing at twice the rate of U.S. exports to the rest of the world, and he wants that number to rise. Scott Kennedy teaches at Indiana University. He says the message is what's good for us is good for China.
Scott Kennedy: You need to take this medicine, but it's good medicine and it'll be better for your economy in terms of improving intellectual property rights, corporate governance, reducing market barriers in several sectors.
But UC Irvine professor Peter Navarro says that's won't be easy for the Chinese. Especially when it comes to swiping intellectual property.
Peter Navarro: It provides anywhere from 10 to 30 percent depending on the estimate of the GDP of that country; so, it's not going away any time soon.
In fact, Navarro says the Chinese think they can innovate by demanding that companies with factories in China fund more R&D right there, while China still makes it tough for foreign firms to compete for contracts. Above all, Geithner wants an end to what he calls the "government domination" of industry there.
In Washington, I'm David Gura for Marketplace.
There are even bigger issue on this slippery slope to china. American corporations setting up joint-ventures in China can not own more than 49%; controlling interest must be in Chinese hands. The law limit foreign ownership to 49 percent of a Chinese-foreign joint venture; and American companies are dying to be there, literally.
Once there, and the know-how in Chinese hands they do whatever they want with all the learned technology, and if the American partner does not like it, they are out. America must put barriers of entry for any country that behaves in this manner. If the company is not 51% or higher ownership, then higher duties. That is just one suggestion; the people in Washington must be smarter than that, right. Even local actions, such as: Dear Wal-Mart if the goods you sell in the US are not 51% or higher US corporate manufactured you income tax will be 5% higher…
Come-on Washington wake-up, stop the economic saber-rattling and take some real actions!
