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Timothy Geithner To Talk Currency Controls, Iran Sanctions In China

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BEIJING — U.S. Treasury Secretary Timothy Geithner and Chinese leaders pledged Wednesday to build economic ties but Beijing gave no sign it would relent in its opposition to American sanctions on Iran's oil industry.

Geithner planned to press Beijing on U.S. complaints about its currency controls as well as lobby for support to rein in Iranian nuclear ambitions. China, the biggest buyer of Iranian oil, has rejected unilateral U.S. sanctions as improper and industry analysts say it is unlikely to cooperate with an oil embargo.

The secretary and Chinese officials were upbeat about relations in portions of meetings reporters were allowed to watch and gave no sign of their conflicts.

"I believe your visit will go a long way to promote the stability and further growth of our economic relationship," said Vice President Xi Jinping, in line to be China's next leader.

Geithner replied that the two sides have a "very strong cooperative relationship" on global economic growth, nuclear nonproliferation and other issues.

"We are looking forward to building on that," he said.

Washington is targeting Iran's oil exports in an attempt to halt what Western governments say is its effort to develop nuclear weapons. The sanctions would bar financial institutions from the U.S. market if they do business with Iran's central bank.

China's fast-growing economy is the world's biggest energy consumer and depends on Iran for 11 percent of its oil imports. China bought about 600,000 barrels of Iranian crude per day in November, nearly one-third of Iran's daily exports of 2.2 million barrels, making Chinese cooperation key to the success of sanctions.

In a meeting Tuesday night with Geithner, Vice Premier Wang Qishan pledged cooperation on global economic issues and called on the United States to loosen export controls on high-tech goods, according to the official Xinhua News Agency. China has long objected to U.S. limits on sales of "dual use" technologies with possible military applications.

Geithner met later with Premier Wen Jiabao, China's top economic official, and Vice Premier Li Keqiang, another rising star. Wen appealed for dialogue instead of confrontation over disagreements, saying "cooperation benefits both while confrontation harms both."

Wen is due to visit oil producers Saudi Arabia, the United Arab Emirates and Qatar on a trip that starts this weekend and will give the premier a high-level opportunity to sound out possible alternative suppliers.

A deputy Chinese foreign minister, Zhai Jun, said at a separate briefing that Wen will sign an energy agreement with the UAE but gave no details. He said oil purchase decisions would be made by Chinese companies, not by the government.

Buying more crude from other Gulf suppliers might do China no good if Iran makes good on threats to disrupt shipping, said Guo Haitao, an expert in petroleum imports at the University of Petroleum in Beijing.

"If Iran seals off the Strait of Hormuz – which is likely to happen if sanctions are imposed on them – then even if Saudi Arabia or the rest of them wanted to sell their oil to China, there would be no way the oil can be shipped over," he said.

China gets 40 to 50 percent of its oil imports from Iran and other Gulf suppliers, so any disruption would be serious, Guo said. He said suppliers in other regions could not ramp up production enough to fill that gap.

"That would deal a major blow to China's industry and transportation," he said.

Overshadowed by Iran, Geithner's visit also comes amid U.S. frustration with China's currency controls and swollen trade surplus that Washington and other governments complain are hampering economic growth.

U.S. officials said Geithner would press Beijing to ease controls that Washington and other governments say keep its yuan undervalued and give its exporters an unfair price advantage – a volatile issue at a time when the global economy is struggling and governments are under pressure to lower high unemployment.

The Chinese government reported Tuesday that its trade surplus with the United States swelled 24 percent in December over a year earlier to $17.4 billion.

Beijing has allowed the yuan to rise in recent years in tightly controlled trading but some American lawmakers are calling for punitive tariffs on Chinese goods if the communist government doesn't move faster.

Later Wednesday, Geithner was to fly to Japan, another major buyer of Iranian oil, to lobby for support for sanctions.

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Associated Press writers Alexa Olesen and Louise Watt and researcher Zhao Liang contributed.

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