U.S. turns up heat over China currency

(News Today) - Tim Geithner, US Treasury secretary, encouraged the US Congress to pile pressure on China to force it to allow its currency to rise and said the administration was examining a range of tools to urge Beijing to act.

But during his appearance in front of Senate and House of Representatives committees on Thursday, Mr Geithner stopped short of promising to impose any of the aggressive legal or administrative measures demanded by US lawmakers.

His comments came in response to renewed anger in Congress about the effects on the US economy of China's intervention to hold down the renminbi. Ahead of the hearing, Beijing hit back at criticism. Jiang Yu, spokeswoman at the Chinese foreign ministry, said: "I would point out that appreciation of the renminbi will not solve the US deficit and unemployment problems."

On Wednesday, Japan intervened in the foreign exchange markets to hold down the yen for the first time in six years after expressing concern about the effects of Chinese market intervention. Naoto Kan, Japan's prime minister, warned on Thursday that Tokyo stood ready to repeat the exercise. "We will absolutely not permit precipitous moves in the yen," Mr Kan said.

Japan's yen 'intervention,' China's yuan 'manipulation'

Mr Geithner credited pressure from Congress for China's recent concessions on the currency. Beijing unpegged the renminbi in June following two years in which it was held constant against the dollar. But, since then, it has allowed the currency to rise by less than 2 per cent. "I think it's important for people to understand how strong the sentiment is here on both sides of the aisle," he said. "It's important for them to remember it's bipartisan."

Two congressmen have proposed a bill to declare Chinese currency manipulation an illegal export subsidy, thus increasing the emergency tariffs the US can impose on imports it deems subsidised. Mr Geithner said he was studying the proposal but that it was a "complicated question". Sander Levin, chairman of the House ways and means committee, said he would decide by early next week whether to push ahead with the bill. He has also suggested taking a case to the World Trade Organisation.

But Mr Geithner resisted a third means of pressing Beijing -- naming China as a currency manipulator in a twice-yearly foreign exchange report. The next version of the publication is due in mid-October, shortly before the G20 heads of government summit in Seoul.

Charles Schumer, a member of the Senate banking committee, criticised Mr Geithner. "I'm increasingly coming to the conclusion that the only person in this room who believes that China is not manipulating its currency is you," he said.

Source : CNN

Posted in: