* Geithner may stand alone on currency issue
* G20 host South Korea says yuan inappropriate topic
* U.S. administration tries to placate Congress
* China's economic clout silences critics
By Paul Eckert
WASHINGTON, Sept 26 U.S. Treasury Secretary
Timothy Geithner faces a lonely campaign to make China's
currency a major issue at the next Group of 20 summit as
would-be allies shrink from confronting Beijing.
Pressured by U.S. lawmakers, Geithner vowed last week to
mobilize countries at the Nov. 11-12 summit in South Korea to
press China for faster appreciation of the yuan CNY=CFXS.
Interviews with officials from G20 countries suggest that
Geithner -- who has acknowledged that few countries are willing
to confront China -- could be leading a posse of one in Seoul.
"The U.S. is more determined than the rest of the G20 to
get something out of China on the yuan," a euro zone monetary
official said, speaking on condition of anonymity.
"It's largely a bilateral matter with the rest looking on
as spectators, either because they don't count enough or
because they aren't very interested," the official said.
South Korean Finance Minister Yoon Jeung-hyun ruled out the
yuan as a G20 topic, saying the forum might take up exchange
rates in general or their impact on the global economy.
"But aside from that, I do not believe that it is
appropriate to have a discussion regarding the foreign exchange
rate or level of a specific country," Yoon said in an interview
with Reuters in Paris on Thursday.
Geithner's drive to make China's currency policy a G20
summit issue appears to be a way to buy time for President
Barack Obama's administration as it deals with an angry
Congress in the run-up to Nov. 2 U.S. elections.
The Obama administration, and Geithner in particular, had
largely avoided actions that would antagonize China in past G20
meetings. But it faces an increasing drumbeat of calls for
action on the yuan from beleaguered Democrats who say a
stronger Chinese yuan would bring relief to American workers.
In a move likely to increase tension with China, the House
of Representatives Ways and Means Committee on Friday approved
a bill that would let the United States slap duties on goods
from countries with undervalued currencies.
The bill may never become law, however, because it faces
uncertain prospects in the Senate.
Since China's central bank in June said it would let the
yuan CNY=CFXS fluctuate more freely, it has risen 1.8 percent
-- accelerating the most as U.S. pressure mounted.
Many U.S. lawmakers believe that China keeps its currency
undervalued by as much as 40 percent to stoke exports at the
expense of U.S. jobs, a claim questioned by many economists.
BRIC SOLIDARITY, ASIAN DEPENDENCY
China can count on solidarity from its partners in the
so-called BRIC countries -- Brazil, Russia and India.
"I believe that this idea of putting pressure on a country
is not the right way for finding solutions," Brazilian Foreign
Minister Celso Amorim told Reuters last week.
Brazil, he said, enjoyed good coordination with China and
"we can't forget that China is currently our main customer."
Russia likewise enjoys its trading relationship with China,
exporting raw materials and energy but not the manufactured
goods that compete against low-cost Chinese goods. Moscow tends
to speak only in general terms about currency flexibility.
"Russia is unlikely to back this," said Evgeny Gavrilenkov,
chief economist at Troika Dialog in Moscow.
"Russia does not have a big trade relationship with China,
and politically I do not think it is profitable for Russia to
back this either," he said.
Visiting New York this past week for the U.N. General
Assembly, Chinese Premier Wen Jiabao flatly rejected any link
between the level of the Chinese yuan and U.S. trade deficits.
China is increasingly assertive as its economic power grows
-- all the more so in neighboring Asia.
It is home to five other G20 members, most of whom count
China as their biggest trade partner.
"The rise of China, the increasing prominence of China, is
a fact of life," said Indonesian Foreign Minister Marty
"It is something that we must all embrace, and celebrate as
a matter of fact, because Indonesia is benefiting as well with
China's increasing economic prominence," he said.
Japan's recent intervention to push its own currency down
from 15-year highs against the dollar makes Tokyo an unlikely
standard-bearer for exchange rate rectitude and an awkward
partner for any U.S. pressure on China, say analysts.
A second European monetary official predicted talk, but no
walk at the G20 meetings.
"It's obvious that we talk about it, but that's as far as
it goes. It's not on the agenda of Korea's G20 presidency and
it wont be a major issue," said the official.
"China has basically been pretending to take significant
steps on its currency for a long time, and I don't expect that
to change for the time being," he added.
(Additional reporting by Toni Vorobyova in Moscow, Walter
Brandimarte in New York, Doug Palmer in Washington and Daniel
Flynn in Paris; Editing by Maureen Bavdek)