US' delaying currency report brightens China relations

The Obama administration is delaying a report to Congress on currency policies, in an apparent effort to tone down rising spat with Beijing on China's currency formation regime, which has been literally pegged to the dollar since mid 2008 when the global financial crisis broke out.

US Treasury Secretary Timothy Geithner said that he will delay publication of the report, due April 15, because several high-level international meetings in the coming months will be a better way to advance American position, the Associated Press reported.

Still, Geithner said in a statement that China should adopt "a more market-oriented exchange rate" to balance the U.S. trade deficit with China.

A growing number of US congressmen have called the Obama administration to ante up the heat on Beijing to revaluate the yuan, because they believe a stronger yuan versus the dollar would make U.S. products less expensive in China, while making Chinese goods more expensive for American consumers.

However, Chinese economists have countered that from 2005 to 2008, China's yuan had risen 21 percent against the dollar, but China's exports to America continued to expand, with the US trade deficit never reduced in the three years.

Geithner's announcement came a day after the White House signaled an improvement in relations between the two countries amid news that Chinese President Hu Jintao will attend a summit on nuclear security this month in Washington. President Barack Obama told the Chinese leader during an hour-long phone call that he welcomed the decision.

The Obama administration is hoping that China will again allow its currency to rise in value against the dollar as a way of narrowing the bilateral trade gap — as it did until mid-2008 when the global recession began to cut sharply into China's exports abroad.

In his statement, Geithner said "there are a series of very important high-level meetings over the next three months that will be critical to bringing about policies that will help create a stronger, more sustainable, and more balanced global economy." They include a meeting of the Group of 20 rich and developing nations in Washington this month, and a strategic and economic meeting with China in May.

"I believe these meetings are the best avenue for advancing U.S. interests at this time," Geithner said.

Two weeks ago, a group of 130 House of Representatives members sent a letter to the administration urging a citation of China as a “currency manipulator”. The lawmakers also called on the Commerce Department to impose trade sanctions on China.

People's Daily Online