US: China abides by currency law
The Bush administration said Friday that neither China nor any other major trading partner of the United States is violating a US law against currency manipulation to gain unfair trade advantages.
The finding ¡ª consistent with a determination last year ¡ª was contained in an annual report to Congress.
A 1988 law requires the Treasury Department to analyze countries' exchange rate policies and determine whether such manipulation is occurring.
The law has economic sanctions that can be imposed on countries found in violation.
In its report, the department said that "no major trading partner of the United States met the technical requirements" laid out in the 1988 law.
The Bush administration has been pressing Beijing to let the yuan be set in open markets. U.S. manufacturers claim China's currency policies has led the yuan to be undervalued by alleged 40 percent, giving Chinese companies a big competitive advantage.
America's politically sensitive trade deficit with China hit a record $15.5 billion in September, the most recent period for which the information is available.
The administration last month rejected a request from 30 members of Congress that it bring a World Trade Organization case against China because of its currency practices.
Administration officials believed pursuing such a case would undermine the administration's diplomatic efforts to get China to change its currency policies.
Friday's report echoed the administration's belief that a system of flexible, market-based exchange rates is best for the United States' major trading partners.
On China, specifically, the report said: "The U.S. government will pursue persistently and firmly its approach to promote economic, financial and market reforms in China and assist China to move as soon as possible to a flexible exchange rate."
Separately, the U.S. dollar fell to another new low against the euro Friday.
Although the Bush administration publicly espouses a "strong dollar" policy, officials haven't taken specific action to stem the dollar's decline.
The sliding dollar helps U.S. exporters by making their goods cheaper to foreign buyers.
That's why private economists believe the administration is privately OK with what so far has been a relatively orderly decline of the U.S. dollar.
The currency report was due to Congress in October ¡ª before the elections ¡ª but was delayed as has happened a number of times in the past.