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Bush, US Senate jerk up pressure on yuan
Updated: 2005-04-20 10:28

US President George W. Bush claimed on Tuesday that Chinese Government was considering taking an interim step toward easing yuan currency peg with the US dollar, according to a Reuter report.

An interim move could help ease Sino-US trade tensions, but Bush said the United States would keep the pressure on China to "eventually" let markets set the value of the yuan.

Some U.S. lawmakers are threatening to penalize China with punitive tariffs, but Bush administration officials say they cannot support such provocative legislation at this point, the report said.

"There have been some indications that they're thinking about ... an interim step toward floating the currency. We're constantly urging them, if they're going to take that step, to take it as soon as possible and eventually get to ... a currency which floats," Bush said in an interview with CNBC.

Bush sought on Tuesday to play down concerns that China was trying to crowd the United States out of energy markets. "I don't think there's a kind of economic war plan," Bush said. "I do think they're trying to ... satisfy a huge appetite for a massive economy growth, a fast-growing economy."

Days ago, Bush said that China is a “great country growing like mad”, and blamed China’s rising oil consumption for the gasoline price hike in the United States.
Bush administration and American manufacturers argue the currency peg makes U.S. imports more expensive and Chinese exports cheaper.

"Obviously we're at a competitive disadvantage to the extent that their currency won't float," Bush said in the interview. But he added: "It's ... certainly not going to be a panacea to get them to float the currency."

Bush said he did not know when Beijing would act. "It's hard for me to predict," Bush said, adding that the administration will "continue to press" Beijing on the issue.

U.S. Treasury Secretary John Snow, in testimony before the U.S. House of Representatives Committee on Financial Services, reinforced the message that "now" is the time for China to loosen its exchange rate.

But he rejected suggestions from Sen. Charles Schumer, a New York Democrat, that senior administration officials had privately signaled their support for Senate legislation aimed at jerking up pressure on China to revalue yuan.

"I don't support, as you know, the type of legislation that has been talked about that would impose a tariff on everything coming out of China," Snow said. "I'm sympathetic to the ideas behind it. ... I just don't think that's the right way."

Schumer and Sen. Lindsey Graham, a South Carolina Republican, have crafted legislation threatening China with a 27.5 percent across-the-board tariff unless it stops pegging the yuan at 8.27 to the dollar.

The US Senate voted 67-33 in favor of that measure earlier this month. The victory prompted Senate leaders to promise a second vote on the bill before July 27 if they agreed to drop the measure until then.

Although Bush administration officials have previously disavowed the bill, Schumer told reporters he had been received a different message in private. "I have gotten signals from the administration, quiet signals, that they're happy we're doing this," Schumer said.

Graham did not go as far as Schumer in claiming quiet administration support for the bill, but said: "I think there's understanding in the administration that ... the more the House and Senate reacts to this problem (of China's currency peg), the more they're in power."

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