U.S. delays report on alleged China currency manipulation
April 4, 2010 3:27 a.m. EDT
U.S. Treasury Secretary Tim Geithner says China needs to move to a more market-oriented exchange rate.
STORY HIGHLIGHTS
- U.S. Treasury Secretary Tim Geithner holds off on China currency report
- Critics argue China keeps currency low, hurting American businesses
- Geithner admits China has maintained an "inflexible exchange rate"
Geithner, explaining the delay in a statement Saturday, said a series of upcoming meetings, including among officials of the Group of 20 financially influential countries, and with China -- are "the best avenue for advancing U.S. interests at this time."
Lawmakers from both parties have called on the Obama administration to speak out against China's refusal to let its currency appreciate.
China has kept its yuan about 6.83 to the dollar for almost two years. Many U.S. economists say the currency is undervalued by as much as 40 percent.
Keeping its currency low makes China's goods cheaper on the world market and more likely to be purchased by other countries. But, analysts say, it hurts American businesses, which cannot then compete.
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"Everyone knows China is manipulating the value of its currency to gain an unfair advantage in international trade," said Iowa Sen. Chuck Grassley, adding he was disappointed in the Treasury secretary's decision.
"If we want the Chinese to take us seriously, we need to be willing to say so in public," said Grassley, the ranking Republican member of the Senate Finance Committee. "The past few years have proven that denying the problem doesn't solve anything."
Chinese officials have insisted the United States is using Beijing as a scapegoat for its own economic problems.
"The Chinese government will not succumb to foreign pressure to adjust our exchange rates," said Zhong Shan, vice minister of commerce, late last month.
Premier Wen Jiabao has been equally stern in his response.
"We oppose the practice of finger-pointing among countries or strong-arm measures to force other countries to appreciate currencies," he told reporters last month.
In his statement, Geithner acknowledged China has maintained an "inflexible exchange rate."
"A move by China to a more market-oriented exchange rate will make an essential contribution to global rebalancing," he said.
Sander Levin, chairman of the House Ways and Means Committee, said the delay was meant to see if the international community can address the issue in the coming months.
"If the multilateral effort does not result in China's making significant changes, the administration and Congress will have no choice but to take appropriate action," said Levin, a Democratic lawmaker from Michigan.
