US business chief optimistic over yuan reform
WASHINGTON - The head of the top business lobby in the United States expressed confidence that China would adopt currency reform by the end of the year, on his return from a high-level visit to that country.
The United States and many of China's trading partners argue that the yuan, which is fixed to the US dollar, gives Chinese exports an unfair advantage, especially after the sharp depreciation of the US dollar over the last year.
"It is a significant issue, I have talked to some people," Donohue told a media briefing of his four day trip to China trip this week, during which he met Prime Minister Wen Jiabao, Foreign Minister Li Zhaoxing and Commerce Minister Bo Xilai.
"I got a very clear sense they understand the issue ... they told me about the investments they were making in their banks and other things and I therefore believe that there is a high probability they will take responsible action in mid-level time," he said.
Donohue said he expected "something done by the end of the year."
"I think we should keep the heat on with good manners and I think we will get some movement," he added.
China, which has fixed its yuan currency in a narrow band at around 8.28 to the dollar for the past decade, is under fierce US pressure to float the yuan.
One measure being considered by the US Congress would impose a 27.5 percent tariff across the board on Chinese imports if the peg does not go within six months.
Donohue called the legislation a "stupid bill," saying the proposed measures went against the principles of the World Trade Organization, the global trade watchdog, of which the United States and China are both members.