• clover-depot-intl-us-ca-email-signature-05-10-2017-902x1772
  • ces_web_banner_toner_news_902x1776
  • Print
  • 2toner1-2
  • cartridgewebsite-com-big-banner-02-09-07-2016
  • ncc-banner-902-x-177-june-2017
  • 05 02 2016 429716a-cig-clearchoice-banner-902x177
  • 4toner4
  • banner-01-26-17b
  • mse-big-banner-new-03-17-2016-416716a-tonernews-web-banner-mse-212


 user 2005-05-18 at 11:09:00 am Views: 110
  • #9560

    White House Warns China to Reform Its Currency

    WASHINGTON (May 05) – The Bush administration is
    intensifying pressure on China to revamp a currency system that critics blame
    for America’s swollen trade deficit and the loss of U.S. factory jobs.

    But it stopped short of branding the country a manipulator
    of currency, a move that could lead to economic sanctions.

    That disappointed manufacturers, some Democratic and
    Republican lawmakers and others who contend China is intentionally keeping its
    currency artificially low to give Chinese companies a competitive edge in
    international trade.

    The Treasury Department, however, as part of its
    twice-a-year report to Congress, warned China on Tuesday that it could be cited
    as a currency manipulator and face economic sanctions unless it moves swiftly to
    overhaul its currency policies.

    “They went right up to the door, but didn’t knock,” Sen.
    Charles Schumer, D-N.Y., complained in an interview. “Congress doesn’t want any
    more talk, it wants action.”

    Schumer said Treasury’s failure to designate China a
    currency manipulator will strengthen efforts by him, Sen. Lindsey Graham,
    R-S.C., and others to get Congress to impose hefty, 27.5 percent penalty tariffs
    on all Chinese imports unless China changes its currency system.

    Over the last two years, the administration has been
    prodding China to stop linking its currency, the yuan, to the dollar. Other
    economic powers also have been calling for such a change.

    In China, central bank governor Zhou Xiaochuan said no one
    should expect quick action. “Our measures will only come out after we have done
    a good feasibility study,” he said.

    Separately, President Bush said Tuesday that China was not
    living up to the market-opening promises it made to join the World Trade
    Organization in late 2001. He urged the country to stop piracy of U.S.
    intellectual property and lift barriers that keep American goods and services

    A 1988 law requires the Treasury Department to analyze
    countries’ exchange rate policies and determine whether manipulation to gain
    unfair trade advantages is occurring. A finding that a country has manipulated
    its currency could ultimately lead to sanctions.

    “If current trends continue without substantial alteration,
    China’s policies will likely meet the statute’s technical requirements for
    designation,” the department’s report said.

    American manufacturers say China’s system has undervalued
    the yuan by as much as 40 percent. The weaker yuan makes Chinese goods cheaper
    in the United States and American products more expensive in China.

    Manufacturers have pushed for China to be designated a
    currency manipulator.

    “If this isn’t currency manipulation, then what else would
    ever qualify,” said National Association of Manufacturers President John

    The administration has come under increasing pressure as
    America’s trade deficit with China has soared to record levels, hitting $162
    billion last year, the largest deficit ever recorded with any country.

    The report called China’s currency policies “highly
    distortionary” – posing a risk to, among other things, China’s trading partners
    and global economic growth.

    The administration said it would monitor China’s progress
    on moving toward a flexible exchange system “very closely over the next six
    months” in advance of the Treasury’s next currency report to Congress.

    Treasury Secretary John Snow, speaking to reporters,
    wouldn’t be pinned down on the timing of a possible designation of China should
    the country not move ahead as the United States wants it to. He also wouldn’t
    detail how high he would like to see China’s currency rise.

    “It should be a real step,” he said. “It should be
    something the world can see and know that China means business.” He said the
    time for China to act is now.

    For their part, the Chinese still insist they need more
    time to shore up their banking system so it can withstand the volatility that a
    flexible currency would introduce.

    The China Foreign Exchange Trade Center, the central
    foreign exchange brokerage, on Wednesday began trading eight new foreign
    currency pairs – a reform that will not affect trading in the yuan or its

    The new system pairs the U.S. dollar against seven other
    currencies: the euro, Australian dollar, British pound, Japanese yen, Canadian
    dollar, Swiss franc and Hong Kong dollar. The eighth new set pairs the euro with
    the Japanese yen.

    Previously, trading by the center was only allowed between
    the yuan and four other currencies: the U.S. dollar, the Hong Kong dollar,
    Japanese yen and euro.


    US ups ante over Chinese currency
    The United States has warned China that its exchange rate
    policies are “highly distortionary” and it could soon be accused of manipulating
    its currency.

    The comments, in a report by the US Treasury Department, mark the fiercest
    rebuke to date in a simmering row over the value of the Chinese yuan.

    The US says the yuan – which is pegged to the US dollar – is undervalued,
    giving Chinese firms a major advantage.

    Chinese officials have ruled out upping the yuan’s value for the time being.

    ‘Economic risk’

    The currency has traded in a narrow band to the US dollar since 1994.

    US critics claim its value is 40% lower than it should be and that this
    seriously disadvantages US firms by making Chinese exports cheaper.

    In a twice-yearly report on the currency practices of its trading partners,
    the US Treasury Department said China was in danger of being censored for
    manipulating its currency if it did not free up its exchange rates.

    While China’s ten year long pegged currency regime
    may have at times contributed to stability, it no longer does

    United States Treasury

    While stopping short of accusing China of unfair currency practices, it urged
    the Chinese government to move “without delay” to make the yuan more flexible.

    “While China’s ten year long pegged currency regime may have at times
    contributed to stability, it no longer does so,” the report said.

    “Current Chinese policies are highly distortionary and pose a risk to China’s
    economy, its trading partners and its global economic growth.”

    However, at a press conference later on Tuesday US Treasury Secretary John
    Snow emphasised that the US government was not calling for an immediate free
    flotation of the yuan.

    “This would be a mistake at this time,” he said. “China’s banking sector is
    not prepared.”


    Many US politicians believe that an artificially low value for the yuan has
    fuelled America’s trade deficit with China, which rose to $162bn last year.

    China has also come under pressure from other Asian countries including Japan
    to adjust its currency system.

    In response, Beijing has urged patience, arguing that it needs to reform its
    banking systems before it will countenance such a move.

    Earlier this month the head of the Chinese central bank refuted a suggestion
    in the state newspaper, the People’s Daily, that the value of the yuan would
    soon be increased.