Chinese language - US Treasury opposes currency bill

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BIZCHINA / Center

US Treasury opposes currency bill

(China Daily)
Updated: 2007-07-28 10:28

The US Treasury Department said it continues to believe that the robust
Strategic Economic Dialogue (SED) is the best means of achieving
progress, when opposing a bill aimed at pressing China to raise the value
of its currency.

The US Senate Finance Committee voted 20-1 on Thursday to pass a bill
that would give the US government new tools to pressure China to float
the yuan currency in open markets. [newsphoto]?

The Treasury said in a statement the bill represents the wrong approach
in achieving essential currency and economic reforms in China that would
reduce trade imbalances.

The US Senate Finance Committee voted 20-1 on Thursday to pass a bill
that would give the US government new tools to pressure China to float
the yuan currency in open markets.

"It distances the US from a multilateral approach and raises serious
concerns regarding US compliance with international rules governing
anti-dumping investigations," the statement said.

The Treasury said it recognized that members of Congress want to send a
strong message to China through this bill and others under consideration,
adding that Treasury Secretary Henry Paulson would tell the Chinese
leadership that "it is vital to the health of the global economy,
including the US economy, that China reform its currency and take other
steps to reduce imbalances."

Paulson will start his fourth visit to China next week and is scheduled
to hold talks with President Hu Jintao and Vice- Premier Wu Yi.

But the Treasury said it cannot support the bill's approach and
"continues to believe that direct, robust discussions with the senior
Chinese leaders, not legislation, is the best means of achieving
progress."

The bill requires the Commerce Department to take "currency
undervaluation" into account when calculating anti-dumping duties on
foreign goods, which could lead to higher duties already in place on many
Chinese products, and encourage US companies to seek new duties on
additional Chinese goods.

The bill also would require the Bush administration to take action
through the International Monetary Fund and eventually the World Trade
Organization against targeted countries that refuse to reform their
currency policies.

The overwhelming vote shows Congress is headed toward passing legislation
by a big enough margin to overcome any presidential veto, said Senator
Charles Schumer, a New York Democrat who helped craft the measure.

A faster appreciation of the yuan is not a panacea to the broadening
US-Chinese trade deficit or other ills, such as losses in manufacturing
jobs, Federal Reserve Chairman Ben S. Bernanke said last week.

Vice-Premier Wu told a dinner in Washington in May attended by Paulson
and Bernanke that the yuan's value was not the cause of the deficit.

She added that about 85 per cent of China's surplus with the US is from
foreign companies exporting products no longer made in the United States,
such as shoes.

Meanwhile, China has made it clear on many occasions that the country
would carry out the exchange rate reform in an independent, controllable
and gradual way to maintain the yuan's strength.

The yuan has seen seesawing fluctuations versus the dollar since 2005.

China promised to deepen the exchange rate reform to allow the yuan to
fluctuate in line with market supply and demand during the second
strategic economic dialogue between the two countries.

China Daily-Agencies

(China Daily 07/28/2007 page2)

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