US takes patient tack on yuan policies
By Neil King Jr (Wall Street Journal)
Updated: 2005-10-10 10:43
Despite fresh political pressure to get tough
again on China, US Treasury officials say they will take a patient line on
China's currency policies during talks in Beijing this week.
The Treasury Department
claimed some credit for a diplomatic victory this summer, when China abandoned
its currency's longtime fix to the dollar and bumped up its value. But the yuan
has hardly moved in the nearly three months since then, despite China's promises
to shift toward greater flexibility.
A Chinese shop
assistant counts 100 Yuan bank notes at a shoes store in China's financial
center Shanghai August 10, 2005. US Treasury officials say the US will
take a patient line on China's policies on
Groups like the National Association of Manufacturers are renewing their cry
for a much bigger revaluation, while influential US lawmakers are threatening to
return to legislation that would punish China if Beijing doesn't act. "We just
can't sit by and twiddle our thumbs," said Frank Vargo, NAM's vice president for
international economics. "This situation just keeps getting more serious."
US industry is hardly unanimous is calling for a higher-priced yuan. Many
large US businesses -- from big retailers like Wal-Mart to US computer companies
manufacturing in and exporting from China -- favor the current value of the
Chinese currency, because it makes products coming to the US so much less
Still, with Treasury Secretary John Snow arriving in China tomorrow
(Tuesday) for his first visit in two years, the tussle over the yuan is
again taking center stage. Mr. Snow is expected to address China's currency
policy during meetings Saturday among the Group of 20 developing and developed
countries, as well as during two days of bilateral US-China discussions starting
Sunday that will include Federal Reserve Chairman Alan Greenspan and other top
Speaking Friday on CNBC, Mr. Snow said he planned to "press" the Chinese on
the currency issue and to "let them know the importance of them acting soon."
The Treasury has been reluctant to resume too heavy a drumbeat over China's
exchange-rate policy, which US officials and manufacturers have argued for years
kept the yuan at an artificially low value, giving an edge to Chinese exporters.
China's trade surplus with the US this year topped $107 billion through July, up
27% from the same span last year.
"I take them at their word that they will do what they have promised to do
over time," said Timothy Adams, Treasury's undersecretary for international
affairs, who will join Mr. Snow on the China trip.