WASHINGTON, May 14: US Treasury Secretary John Snow on Friday renewed pressure on China to let its currency trade freely, saying the United States has made clear it wants Beijing to move to a flexible exchange rate. Now is the time, and we’re anxious to see them move, Snow said in an interview on CNBC television. It is a sovereign decision, but they know that we want to see them move now.
China maintains its currency in a narrow band around 8.28 yuan to the dollar. U.S. lawmakers and manufacturers complain the Chinese currency’s link to the dollar keeps prices for Chinese goods low and hurts US manufacturers. The Bush administration is under pressure from Congress to show progress in moving China toward a flexible currency to rein in the US trade deficit with the Asian giant, which hit $162 billion last year.
Lawmakers have proposed legislation threatening high tariffs unless Beijing drops its currency peg. They have urged the administration to spotlight China in a semiannual report on countries that manipulate their currency to gain an unfair advantage in trade.
Snow said he believes China’s economy is prepared to accommodate a flexible exchange rate. We’ve had any number of discussions with them. There is a Chinese team of technical experts that’s been meeting with the Treasury for the better part of the last two years, he said.
China’s central bank governor, Zhou Xiaochuan, said last month there were no serious political or technical obstacles to reform the tightly held yuan currency but the timetable for any change was still under review. Zhou declined to comment on when China might move on the yuan, also called the renminbi, but said expectations were too high that a change in the foreign exchange regime could resolve problems like trade friction with the United States. —Reuters
