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U.S., China discuss economic ties amid tension

By the CNN Wire Staff
U.S. Treasury Secretary Timothy Geithner Saturday at the G20 Finance Ministers meeting in Gyeongju, South Korea.
U.S. Treasury Secretary Timothy Geithner Saturday at the G20 Finance Ministers meeting in Gyeongju, South Korea.
STORY HIGHLIGHTS
  • Timothy Geithner meets Wang Qishan after urging China to stop manipulating its currency
  • The U.S. thinks Beijing keeps its currency artificially low to encourage exports
  • Geithner is also laying the groundwork for President Obama's G-20 trip next month

Beijing, China (CNN) -- U.S. Treasury Secretary Timothy Geithner met China's Vice-Premier Wang Qishan on Sunday and "exchanged views" about economic relations between their countries, both sides said.

The meeting came shortly after Geithner publicly hammered China over its currency, which Washington says Beijing keeps at artificially low levels to boost exports.

Geithner had urged the world's leading finance ministers to take strong action to ensure emerging markets nations allow their currency to rise in value in line with the free market.

The worry is that if such currency manipulation continues, it could wreak havoc on international trade.

He insisted that "countries that have traditionally run large trade and current account surpluses" -- which China has done -- needed to move "away from export dependence and toward stronger domestic demand led growth."

He said rich countries like the United States needed to play their part too by saving, investing and exporting more.

Video: G-20 finance ministers meet
Video: Rising concerns over currencies
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He was speaking at a meeting of finance ministers of the G-20 group of nations. Their two-day meeting wrapped up Saturday in Gyeongju, South Korea, with the ministers pledging not to engage in currency wars.

Geithner then flew on to China, where he met Wang at the Qingdao Airport.

They also discussed plans for the G-20 leaders meeting in Seoul, South Korea, next month, the Americans said.

In the G-20 finance ministers' closing statement, they said they would "move towards more market determined exchange rate systems that reflect underlying economic fundamentals and refrain from competitive devaluation of currencies."

The ministers added that the G-20 member nations would "continue to resist all forms of protectionist measures and seek to make significant progress to further reduce barriers to trade."

The G-20 stopped short of outright banning currency manipulation though.

The meeting was a precursor to the larger G-20 meeting taking place in Seoul on November 11 and 12. That summit will involve the heads of state from the G-20 nations. President Obama will attend.

Tensions about currency and trade are likely to be high at that meeting as well.

The G-20 acknowledged in Saturday's statement that the global economic recovery is currently advancing, but it was doing so in "a fragile and uneven way."

The ministers added that "growth has been strong in many emerging market economies, but the pace of activity remains modest in many advanced economies."

As further evidence of that, China announced earlier this week that its gross domestic product for the third-quarter rose at an annual rate of 9.6 percent.

While that's slower than in previous quarters, it is still far higher than the growth rates of the United States, Japan and nations in Europe.

China's central bank also announced earlier this week that it was raising a key interest rate for the first time in nearly three years.

That comes at a time when many expect the Federal Reserve to soon announce more details about how it intends to further ease its own monetary policies.

In a nod to the increased economic clout of China and other emerging markets, such as Brazil, India and Russia, the G-20 ministers also announced a deal Saturday that would give emerging markets countries more seats on the board of the International Monetary Fund.

CNN's Paul LaMonica and Jo Kent contributed to this report.