Timothy Geithner, US treasury secretary. Pankaj Nangia / Bloomberg News

Meeting here with old friend, Joseph Yam, seen as significant

In a surprise move that heightened Hong Kong's crucial role as an international financial center, US Treasury Secretary Tim Geithner made an impromptu half-day visit to the city Thursday, ahead of his talks in Beijing with Vice Premier Wang Qishan on currency policies.

The highlight of Geithner's short stay was his meetings with current and former government and financial leaders of the city.

Geithner met with Chief Executive Donald Tsang and his predecessor Tung Chee Hwa, who is now a vice chairman of the Chinese People's Political Consultative Conference (CPPCC).

He also met with Financial Secretary John Tsang and former Hong Kong Monetary Authority Chief Executive Joseph Yam, who is reportedly an old friend of Geithner's.

Though the meetings were behind closed doors, some commentators believe Geithner's meeting with Joseph is significant, as Yam is now an executive vice president of the China Society for Finance and Banking, which is a think tank linked to People's Bank of China.

Political scientist James Sung Lap-kung, an academic coordinator at the City University's School of Continuing and Professional Education, said Geithner's meeting with Yam was a good way to gauge Geithner's proposals to be unveiled in Beijing.

"Yam would be a good bridge between the US and China. As the former head of the Hong Kong Monetary Authority, Yam is one of the best brains to pick over the currency issue," said Sung, citing Yam's rapport with former Federal Reserve Chairman Alan Greenspan, current Fed chief Ben Berneke and top officials in mainland banks and financial institutions.

Sung also suggested that Geithner was in town to recruit allies and to look for support for the yuan's appreciation. "He may try to put pressure on Yam who may in turn put pressure on Beijing," Sung said.

"He (Geithner) is a smart guy and he knows you can't put direct pressure on Wang Qishan," Sung added.

Last year in Beijing, Joseph Yam said the yuan could join the US dollar and the euro to become the world's third currency pillar if its appreciation and the economy were prudently managed.

He also suggested Hong Kong was an ideal proving ground for the currency's internationalization to steer future policy.

Relations between China and the US have been strained recently over a string of moves by the US, but most recently US lawmakers have zeroed in on controls on the yuan's appreciation.

Geithner has been under pressure by Congress to declare China a currency manipulator and US lawmakers are pushing for penalties such as tariffs on exports and bans on Chinese companies receiving US government contracts.

China Daily

(HK Edition 04/09/2010 page3)