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Geithner in Beijing, faces uphill struggle on Iran

Geithner in Beijing, faces uphill struggle on Iran

January 11th, 2012 by JOE McDONALD, Associated Press in News

BEIJING (AP) - China and the United States have pledged during a visit by Treasury Secretary Timothy Geithner to cooperate on boosting the global economic recovery, but Chinese backing for U.S. sanctions on Iran's oil industry appeared unlikely.

China buys almost one-third of Iran's oil exports and has rejected the U.S. sanctions as a tool to rein in Tehran's nuclear program. That sets Washington up for a public setback if the government of the world's second-largest economy refuses to cooperate.

Geithner was expected to make the U.S. case for sanctions in meetings Wednesday with Premier Wen Jiabao, Vice President Xi Jinping - who is in line to become China's next leader - and Vice Premier Li Keqiang, another rising star.

At the start of his meeting with Xi, Geithner said the main priority of his talks was economic growth and recovery in the United States and around the world, although he did briefly mention nuclear nonproliferation.

"On economic growth, financial stability around the world, on nonproliferation, we have what we view as a very strong cooperative relationship with the government and we are looking forward to building on that," he said before reporters were ordered out of the meeting room in the Great Hall of the People in central Beijing.

The reporters were told to leave by the Chinese side earlier than agreed, drawing a protest from U.S. Embassy spokesman Richard Buangan.

Geithner also past on greetings from President Barack Obama and Vice President Joe Biden, saying both were looking forward to seeing Xi "in Washington relatively soon." Xi is expected to visit the U.S. sometime in the next several months.

Geithner met with his counterpart, Vice Premier Wang Qishan, on Tuesday night. According to the official Xinhua News Agency, Wang also pledged cooperation on global economic issues, and called on the United States to loosen export controls of high-tech products to China, one of China's complaints about the countries' trade relationship.

U.S. critics, meanwhile, say Chinese currency controls keep the yuan undervalued and give its exporters an unfair advantage, distorting trade at a time when Washington and other governments are under pressure to bring down unemployment.

China's trade surplus with the United States widened 24.2 percent to $17.4 billion in December, according to data released Tuesday.

Geithner also is due to visit Tokyo, another major buyer of Iranian oil, for talks after he leaves Beijing later Wednesday.

China has criticized U.S. sanctions on Iran, approved by Obama on New Year's Eve, as improper and ineffective. Beijing supported U.N. sanctions on Iran's nuclear program but says action should be multilateral.

The sanctions would target Tehran's oil industry by barring financial institutions from the U.S. market if they do business with Iran's central bank.

China's oil imports "have nothing to do with the nuclear issue," a Chinese deputy foreign minister, Cui Tiankai, said Monday.

"We should not mix issues with different natures, and China's legitimate concerns and demands should be respected," Cui said.

Analysts in Beijing said China has no reason to go along with the sanctions.

"China does not want to be seen as helping the U.S. when China's own interest is concerned," said Wang Lian, an Iran expert at Peking University's School of International Relations.

He said Chinese opposition might be reinforced by Washington's latest military strategy report published last week. It singles out Beijing as a power with the potential to affect the U.S. economy and security.

Industry analysts say that even if China agreed, it would face formidable challenges in trying to replace Iran as an oil source.

Premier Wen is due to visit major oil producers Saudi Arabia, the United Arab Emirates and Qatar on an official trip that starts this weekend.

Chinese officials have given no details of planned talks, but the trip would give Wen a high-level opportunity to sound out possible alternative suppliers in case Beijing agrees to buy less Iranian crude.

China's fast-growing economy is the world's biggest energy consumer and imports half its oil. Some 11 percent comes from Iran, or about 600,000 barrels per day in November, according to energy market analysts Argus Media.


Associated Press writer Alexa Olesen and researcher Zhao Liang contributed to this report.