US: China not manipulating currency

(China Daily)
Updated: 2008-12-12 14:57

WASHINGTON -- The Bush administration has declined to cite China for what is claimed to be currency manipulation to gain an unfair trade advantage against the United States.

A Bush administration report issued Wednesday criticized China for slowing the pace at which its currency was rising in value against the dollar. It also said China must return to a more rapid pace of currency appreciation.

But in the report, which must be submitted to Congress every six months, the administration said China did not meet the standards set in US law for being cited as a currency manipulator.

While the yuan has risen nearly 20 percent against the greenback in the past three years, the appreciation has stalled since July.

Chinese experts warned earlier that pushing for a rising yuan now will be a "lose-lose move" for both China and the US amid the current global financial meltdown.

It will put additional pressure on exports, lead to price rises of Chinese goods overseas and push inflation higher in the US, they said.

Some American manufacturers and their supporters in Congress believe that China's undervalued currency is the key reason for the record trade gap between the two countries. Frank Vargo, vice-president for international affairs at the National Association of Manufacturers, said he was disappointed in the administration's continued refusal to cite China for currency manipulation.

The US trade deficit with China is the largest ever recorded with a single country and recently has been setting new monthly highs. US manufacturers contend China has slowed the pace of currency reform to cope with a global economic downturn that threatens to harm its economy, of which exports are one of the key drivers.

The administration released the latest currency report without fanfare only days after Treasury Secretary Henry Paulson led a delegation of administration officials to Beijing for high-level talks.

In the latest currency report, the administration said it had found ample evidence that the Chinese currency was "substantially undervalued". It urged the Chinese government to move in an "expeditious" way toward a currency whose value was set by market forces.

China has said that the ultimate goal of its currency reform was to establish a market-oriented foreign exchange regime.