By  on January 29, 2012

DAVOS, Switzerland — U.S. Treasury Secretary Timothy Geithner’s uncharacteristically strident tone about China’s “very damaging” subsidization of state-owned enterprises here Friday drew varying responses from trade and business officials, with some applauding his more aggressive stance as others urged restraint.

Geithner said China “systematically” subsidizes enterprises’ costs of energy, access to credit capital and land prices and also caps the exchange rate below its real value, hurting trading partners and the global trading system in the process.

“It means that even though China is starting to have a world-class manufacturing sector, it is supporting that ambition with a set of policies that are very damaging not just to commercial and economic interests of the trading partners, but the critical [political] support around the world for sustaining the world trading system,” he said.

During a public interview watched by nearly 2,000 business and political leaders attending the 2012 Davos World Economic Forum, Geithner, a mandarin speaker, said, “It’s very important that we get China to move comprehensively, not just on the exchange rate, but on dialing back those set of subsidies and distortions.”

 

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