Treasury Secretary Timothy F. Geithner played down the danger of a trade war over China’s currency policy after U. S. lawmakers took a step toward approving a bill designed to protect against Chinese imports.

The U.S. Treasury chief said yesterday he wasn’t sure “what that means” to talk about a “currency war.” In any case, “we’re not going to have currency wars,” he said.

By Rebecca Christie and Sophie Leung |

“We’re not going to have a trade war, ” Geithner said in remarks to a Washington conference yesterday hosted by The Atlantic magazine and the Aspen Institute. He also said that if the recent appreciation in the yuan “continues, that would make a really material difference on their economics and on our economics in ways that we think are important. ”

The comments, along with the gains in the yuan, which yesterday posted its biggest monthly gain against the dollar since 2005, signal subsiding risk of tit-for-tat trade sanctions. While the House of Representatives approved a bill this week letting companies seek compensation for imports from countries with misaligned exchange rates, the Senate has yet to vote.

“It won’t work if they pressure China too hard, ” said Xie Dongming, a Singapore-based economist at Oversea-Chinese Banking Corp. The prospect of trade war “will make both countries suffer, and it’s not serving the best interest for the two nations, ” he said.

Geithner Says No Threat of China Trade War or Currency Wars – Bloomberg.