WASHINGTON _ Despite pressure from the US Congress, the Bush
administration on Wednesday refused to cite China as a country that manipulates
its currency to gain unfair trade advantages.
finding was quickly challenged by a group of senators who said they would
introduce legislation to make it easier for the United States to pursue economic
sanctions against China if the country does not allow its currency to rise in
value more quickly against the dollar.
American manufacturers contend that China is undervaluing its currency by as
much as 40 percent. That has been a boon for American consumers, providing them
with cheaper-priced Chinese imports, but it has driven the US-China trade gap to
an all-time high of $232.6 billion, one-third of America's record deficit of
$758.5 billion last year.
But the administration, in its semi-annual currency report, said that China
did not meet the technical requirements of a country that is manipulating its
currency to gain trade advantages.
The Treasury Department said China's acts on its currency is the standard set
in the law.
The finding had been expected. Treasury Secretary Henry Paulson has launched
a series of twice-a-year, high-level meetings with top Chinese officials.
The hope is that this new Strategic Economic Dialogue will bring pressure on
China to allow the yuan to rise more quickly in value and also deal with a host
of other trade tensions including rampant piracy of American copyrighted
material in China.
But Congress, under pressure from voters upset with soaring US trade deficits
and the loss of more than 3 million manufacturing jobs since 2000, is pushing
for the administration to take a tougher approach.
Various senators announced Thursday that they planned to introduce
legislation to toughen the US response to China's currency policies.
Senate Banking Committee Chairman Chris Dodd and Sen. Richard Shelby, the top
Republican on the panel, said they were sponsoring a bill that would tighten the
definition of currency manipulation and require Treasury to consult with the
International Monetary Fund on the issue and also bring a case before the World
Trade Organization if China does not allow its currency to rise more quickly in
"A change in our currency manipulation policy is long overdue," Dodd, a
candidate for the Democratic presidential nomination, said in a statement.
Shelby said the legislation was needed because despite the evidence,
"Treasury has regrettably declined to label China a currency manipulator."
Another group of lawmakers, including Democrats Charles Schumer and Senate
Finance Committee Chairman Max Baucus and Republicans Lindsey Graham and Charles
Grassley, were scheduled to introduce their own legislation aimed at Chinese
practices later Thursday.
The bill would replace a measure Schumer and Graham sponsored last year that
would have imposed 27.5 percent penalty tariffs on all Chinese imports as
punishment for China's currency regime.