Dear CIGAs,

IT IS NEVER WISE TO INSULT YOUR BIGGEST CUSTOMER, ESPECIALLY WHEN YOU PLAN A BIG SALE OF PRODUCT THAT YOU WANT THEM TO BUY. Even if you have political debts to large donors who do not care about what is best for the average American, they care only about what is best for them.

Respectfully yours,

Monty Guild
www.GuildInvestment.com

Chinese Ministry Denies Geithner’s Currency Claims
JANUARY 25, 2009, 9:35 P.M. ET
By IAN JOHNSON and SHEN HONG

BEIJING — A Chinese ministry Saturday strongly denied Obama administration claims that China "manipulates" its currency, as the first contact between the new administration and China takes a markedly sour tone.

On Thursday, President Obama’s nominee for Treasury secretary, Timothy Geithner, told U.S. lawmakers that President Barack Obama, "backed by the conclusions of a broad range of economists — believes that China is manipulating its currency." No Chinese official of Mr. Geithner’s standing has fired back — a move analysts say shows that China doesn’t want to overreact to the statement — but Saturday morning an official from China’s Ministry of Commerce said "we never have used currency manipulation or exchange-rate manipulation as a mains to gain an advantage in international trade." The statement, provided by an official from the ministry’s news department, also said China would not "rely on devaluations" of its currency, the yuan, to promote exports.

Some Chinese commentators say the verbal sparring is a sign of greater trade friction to come with Washington. They noted that both sides’ comments were written, not spoken — and therefore should be taken as a serious view of intent.

"This is the first communication by the new president’s team to China and it is provocative," said Shen Dingli, professor of international relations at Fudan University in Shanghai. China’s official Xinhua news agency also weighed in Friday evening, saying that Mr. Geithner’s claim "fans Sino-U.S. trade fears," alluding to concern in Beijing over protectionism in the new administration.

Chinese officials are deeply concerned that the global economic downturn could spur protectionist moves in the U.S. and elsewhere that could further damage China’s trade-dependent economy. Mr. Geithner’s comments marked a significant escalation in U.S. criticism of China’s exchange-rate system.

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