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China pans US Treasury criticism of yuan policy
Source: Agencies |
September 17, 2010, Friday
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China rejected US Treasury Secretary Timothy Geithner's criticism of its currency policy and warned yesterday that continued pressure might worsen the situation.
Geithner complained in testimony prepared for two congressional hearings yesterday that China's currency and other policies are hurting the United States. US lawmakers say China keeps its yuan "undervalued," giving its exporters an unfair price advantage.
"The appreciation of the renminbi can't solve the trade deficit with China," said Foreign Ministry spokeswoman Jiang Yu. "Pressure cannot solve the issue. Rather, it may lead to the contrary."
China promised more exchange rate flexibility in June and the yuan was allowed this week to rise to its highest level against the dollar since June - a rise of 1.25 percent.
"We are concerned, as are many of China's trading partners, that the pace of appreciation has been too slow and the extent of appreciation too limited," Geithner said.
Geithner told a Senate Banking Committee hearing that the yuan was strengthening too slowly and the White House was looking for ways to get Beijing to move faster.
"China needs to allow significant, sustained appreciation over time to correct this undervaluation and allow the exchange rate to fully reflect market forces," he said.
But even as he talked tough, Geithner sought to buy time for US diplomatic efforts with China, saying the US would use a Group of 20 summit in Seoul in November to try mobilize support for Chinese currency reform.
Lawmakers in both the Senate and House, responding to voters unhappy with high unemployment in the US following a deep recession, are pushing legislation that would expand the government's power to impose trade sanctions on China.
Geithner, while not endorsing the bills, said that the administration was committed to "using all tools available to ensure that American firms and workers can trade and compete fairly with China."
He did not elaborate on specific measures under consideration.
Geithner made clear that US patience on China's currency policy was wearing thin but said only that the valuation of the yuan would be taken into account when the Treasury Department issues its semiannual foreign exchange report due on October 15.
The administration has so far refrained from officially accusing China of manipulating its currency for unfair advantage, which would open the door to US trade sanctions.
China could retaliate if Congress actually passes legislation. A trade war between the two countries would be a serious blow to President Barack Obama's effort to ease strains on a range of economic and foreign policy disputes.
Geithner complained in testimony prepared for two congressional hearings yesterday that China's currency and other policies are hurting the United States. US lawmakers say China keeps its yuan "undervalued," giving its exporters an unfair price advantage.
"The appreciation of the renminbi can't solve the trade deficit with China," said Foreign Ministry spokeswoman Jiang Yu. "Pressure cannot solve the issue. Rather, it may lead to the contrary."
China promised more exchange rate flexibility in June and the yuan was allowed this week to rise to its highest level against the dollar since June - a rise of 1.25 percent.
"We are concerned, as are many of China's trading partners, that the pace of appreciation has been too slow and the extent of appreciation too limited," Geithner said.
Geithner told a Senate Banking Committee hearing that the yuan was strengthening too slowly and the White House was looking for ways to get Beijing to move faster.
"China needs to allow significant, sustained appreciation over time to correct this undervaluation and allow the exchange rate to fully reflect market forces," he said.
But even as he talked tough, Geithner sought to buy time for US diplomatic efforts with China, saying the US would use a Group of 20 summit in Seoul in November to try mobilize support for Chinese currency reform.
Lawmakers in both the Senate and House, responding to voters unhappy with high unemployment in the US following a deep recession, are pushing legislation that would expand the government's power to impose trade sanctions on China.
Geithner, while not endorsing the bills, said that the administration was committed to "using all tools available to ensure that American firms and workers can trade and compete fairly with China."
He did not elaborate on specific measures under consideration.
Geithner made clear that US patience on China's currency policy was wearing thin but said only that the valuation of the yuan would be taken into account when the Treasury Department issues its semiannual foreign exchange report due on October 15.
The administration has so far refrained from officially accusing China of manipulating its currency for unfair advantage, which would open the door to US trade sanctions.
China could retaliate if Congress actually passes legislation. A trade war between the two countries would be a serious blow to President Barack Obama's effort to ease strains on a range of economic and foreign policy disputes.
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