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Snow: China should get credit for yuan moves
(USAtoday.com)
Updated: 2005-11-30 12:33 WASHINGTON — Treasury Secretary John Snow praised
China Tuesday for its initial moves toward a floating currency and rejected
criticism that the Bush administration has been too soft on Beijing.
Treasury Secretary
John Snow speaks during a news conference in Beijing in this October 17,
2005 photo. [Reuters] | In
an interview with USA TODAY and Gannett News Service, Snow said the Chinese
deserved credit for removing the yuan's fixed link to the value of the dollar in
July, opening the door to additional moves and setting a long-term goal of a
floating exchange rate.
"They have agreed with our basic proposition that the currency should be more
flexible; it should reflect underlying market conditions. The disappointment is
they haven't moved faster," Snow said. "We're going to continue to press them to
move faster. But I don't think we should take the view that nothing has
happened."
U.S. manufacturers say the Chinese yuan is substantially undervalued, making
Chinese goods artificially inexpensive. This year, the U.S. trade deficit with
China is expected to top a record $200 billion.
Monday, the Treasury Department released a report required under U.S. trade
law, which concluded that China is not manipulating the yuan's value to gain
trade advantages.
The yuan strengthened to a record Tuesday of 8.0796 to $1 — about 2.3%
stronger than the rate before the July move. But that's just a fraction of the
appreciation some beleaguered manufacturers and their allies are demanding.
Sens. Charles Schumer, D-N.Y., and Lindsay Graham, R-S.C., may seek a vote as
soon as next month on their legislation to impose a 27.5% tariff on Chinese
goods until the yuan is substantially revalued.
The administration opposes that measure, but Snow sought to claim common
ground with congressional critics.
"We're all on the same wavelength. The only place we differ is in how best to
get the (currency) matter advanced," he said.
Treasury will assess China's progress toward greater exchange rate
flexibility in preparing the next report in the spring.
But Snow said it would be "inadvisable" to specify what China needed to do to
avoid being labeled a currency manipulator. (Such a judgment would only initiate
bilateral consultations. But it is seen as a symbolic step that could unleash
protectionist sentiment on Capitol Hill.)
"There's real action there. ... We think they're making progress. But the
test of progress is actual flexibility," he said.
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