Geithner in Beijing, faces uphill struggle on Iran

 Published: 1/11/2012 1:26:04 AM GMT
AP Original Cached

BEIJING – 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.

Geithner met with his counterpart, Vice Premier Wang Qishan, on Tuesday night. He said he told Wang that the two sides "share so many important interests, and among those are increasing our cooperation on global economic issues."

China's official Xinhua News Agency said China and the United States pledged to further cooperate to boost the global economic recovery, and quoted Wang as saying the world economic situation is still "very complex and grim."

Wang also 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 on Thursday morning.

China has criticized U.S. sanctions on Iran, approved by President Barack 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.

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.

Still, Geithner's trip might not be wasted, because Washington is only starting a campaign to promote its sanctions, Peking University's Wang said. He said China might face pressure to cooperate if other governments agree to comply.

"The U.S. is not wasting their efforts," Wang said. "Pressuring China is what they can do, but it is fairly difficult to get China to stand on their side."


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

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