US unlikely to push China hard on currency

08:59, May 20, 2010      

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The United States will continue pushing China at top-level talks in Beijing next week to let its yuan appreciate in value, but trade issues appeared to be higher on the U.S. agenda.

U.S. Treasury Secretary Timothy Geithner and the department's senior coordinator for Chinese affairs said on Wednesday they will urge China to see yuan appreciation as being in its own interest as well as that of the global economy.

But next Monday and Tuesday's Strategic and Economic Dialogue in Beijing is essentially cast as one in a series of gatherings between now and late June in which the Obama administration will try to gently push its point that Beijing should act.

"It's very important, and we've made very clear that a more market-oriented exchange rate would contribute to balanced, sustainable growth," David Loevinger, Treasury's senior coordinator for Chinese affairs, said at a briefing.

Earlier, Geithner said yuan appreciation was not just a U.S.-China issue but one involving the whole global economy. China has amassed huge trade surpluses and foreign reserves while becoming an exporting powerhouse. Now, the United States and others want China to boost consumption at home.
The U.S. Treasury has postponed a report on currency practices of key trade partners past a scheduled April 15 release, saying it wanted to explore the issue further at S&ED talks and at meetings of Group of 20 finance ministers in early June and G20 leaders later next month.

Geithner said he didn't know when China will act on its currency.

"I don't know when they're going to move,"he said in an interview on CNBC television. "But I think it's very much in their interest for them to move."

Trading in offshore dollar/yuan forwards on Wednesday implied that markets thought chances for future yuan appreciation were lower. But trading was thin and market participants were awaiting next week's talks for any hint of a shift in China's yuan policy.

One factor complicating efforts to push China toward resuming the yuan's appreciation -- a move Beijing permitted from mid-2005 until mid-2008 but then abruptly halted because of global financial crisis -- is the recent steady decline in the euro's value.

That puts China's exports to Europe at risk because a weaker euro raises import prices and is likely to increase Beijing's reluctance to let the yuan rise in value, analysts say.

A Chinese Ministry of Commerce report issued on Wednesday said the yuan has risen nearly 14.5 percent against the euro this year and predicted it will hurt China's exports this year.

Geithner and Secretary of State Hillary Clinton will lead a delegation of about 200 U.S. officials to the Beijing talks for the second round of meetings since the Obama administration took office.

People's Daily Online/Agencies


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