U.S. Wants Progress on China Currency
U.S. Wants Progress on China Currency
washingtonpost.com
U.S. Wants Progress on China Currency
By MARTIN CRUTSINGER
The Associated Press
Friday, April 15, 2005; 2:48 AM
WASHINGTON -- The Bush administration, trying to restrain America's soaring trade deficit with China, has rounded up some powerful allies to help convince the Chinese that they must overhaul their currency regime and do it quickly.
The problem is there is no indication the Chinese feel the same sense of urgency.
The administration is going ahead with plans to make China's currency practices a top agenda topic when Treasury Secretary John Snow and Federal Reserve Chairman Alan Greenspan serve as hosts for a weekend meeting of their counterparts from the world's seven richest industrial nations.
The Group of Seven countries were expected to go on record again in urging China to stop linking its currency, the yuan, directly to the U.S. dollar. American manufacturers contend this practice has undervalued the yuan by as much as 40 percent, giving Chinese companies a tremendous competitive advantage against U.S. products.
They blame China's undervalued currency for contributing to America's record $162 billion trade deficit with China last year and the loss of 3 million U.S. manufacturing jobs since 2000.
At the G-7 meetings in Washington in October and London in February, China's top economic officials attended as invited guests to take part in the currency discussions.
However, this time around, Chinese officials decided to take a pass, perhaps believing that they had heard enough lobbying on the currency issue for the moment. They continue to maintain that China cannot drop its link to the U.S. dollar because too much currency volatility could disrupt the nation's fragile banking system.
The G-7 discussions, which will begin with a dinner Friday night and wrap up Saturday morning, are a prelude to the spring meetings of the 184-nation International Monetary Fund and its sister lending institution, the World Bank, which occur Saturday and Sunday.
All of the discussions, as usual, will take place under heavy security, although indications are that the number of anti-globalization protesters will be far below the levels that have come out in past years.
Groups pushing rich countries to forgive all the debt of the world's poorest nations planned to stage various demonstrations near the IMF and World Bank headquarters, two blocks from the White House, in hopes of dramatizing the impact on poor nations from further delays in dealing with the debt issue.
At one event, they planned to unveil a massive clock with huge hands to symbolize their contention that "one child dies every three seconds because of poverty, and the G-7 must act now."
Bernice Romero, advocacy director of Oxfam International, said, "G-7 finance ministers must not leave these meetings without a firm agreement on canceling debt."
In addition to China's currency system and debt burdens, the finance officials were expected to discuss the threat posed to the global economy by this year's spike in energy prices and problems associated with America's huge trade deficit and prolonged weak economic growth in Europe and Japan.
Administration officials tried to put the best face on China's absence from the spring meetings, saying it was never their intention to invite China to all four G-7 meetings each year. Treasury Undersecretary John Taylor suggested to reporters Thursday that a good schedule might be to have China attend two meetings each year.
Taylor said the administration believed China could move immediately to allow its currency's value to be set by market forces. He said the IMF had come to a similar conclusion in its latest global economic survey.
President Bush told the American Society of Newspaper Editors on Thursday that his administration was "pressing" China to allow the value of its currency to be set by market forces.
The political urgency of the situation was underscored by a lengthy hearing before the House Ways and Means Committee in which Democratic and Republican lawmakers said something must be done to deal with America's soaring trade gap with China.
Bills have been introduced in both the House and Senate to impose economic sanctions on China if it does not move to a floating currency. One proposal would slap 27.5 percent across-the-board tariffs on Chinese goods coming into the United States until China revamped its currency system.
"People want something more than rhetoric," said Rep. Sander Levin, D-Mich.
© 2005 The Associated Press
washingtonpost.com
U.S. Wants Progress on China Currency
By MARTIN CRUTSINGER
The Associated Press
Friday, April 15, 2005; 2:48 AM
WASHINGTON -- The Bush administration, trying to restrain America's soaring trade deficit with China, has rounded up some powerful allies to help convince the Chinese that they must overhaul their currency regime and do it quickly.
The problem is there is no indication the Chinese feel the same sense of urgency.
The administration is going ahead with plans to make China's currency practices a top agenda topic when Treasury Secretary John Snow and Federal Reserve Chairman Alan Greenspan serve as hosts for a weekend meeting of their counterparts from the world's seven richest industrial nations.
The Group of Seven countries were expected to go on record again in urging China to stop linking its currency, the yuan, directly to the U.S. dollar. American manufacturers contend this practice has undervalued the yuan by as much as 40 percent, giving Chinese companies a tremendous competitive advantage against U.S. products.
They blame China's undervalued currency for contributing to America's record $162 billion trade deficit with China last year and the loss of 3 million U.S. manufacturing jobs since 2000.
At the G-7 meetings in Washington in October and London in February, China's top economic officials attended as invited guests to take part in the currency discussions.
However, this time around, Chinese officials decided to take a pass, perhaps believing that they had heard enough lobbying on the currency issue for the moment. They continue to maintain that China cannot drop its link to the U.S. dollar because too much currency volatility could disrupt the nation's fragile banking system.
The G-7 discussions, which will begin with a dinner Friday night and wrap up Saturday morning, are a prelude to the spring meetings of the 184-nation International Monetary Fund and its sister lending institution, the World Bank, which occur Saturday and Sunday.
All of the discussions, as usual, will take place under heavy security, although indications are that the number of anti-globalization protesters will be far below the levels that have come out in past years.
Groups pushing rich countries to forgive all the debt of the world's poorest nations planned to stage various demonstrations near the IMF and World Bank headquarters, two blocks from the White House, in hopes of dramatizing the impact on poor nations from further delays in dealing with the debt issue.
At one event, they planned to unveil a massive clock with huge hands to symbolize their contention that "one child dies every three seconds because of poverty, and the G-7 must act now."
Bernice Romero, advocacy director of Oxfam International, said, "G-7 finance ministers must not leave these meetings without a firm agreement on canceling debt."
In addition to China's currency system and debt burdens, the finance officials were expected to discuss the threat posed to the global economy by this year's spike in energy prices and problems associated with America's huge trade deficit and prolonged weak economic growth in Europe and Japan.
Administration officials tried to put the best face on China's absence from the spring meetings, saying it was never their intention to invite China to all four G-7 meetings each year. Treasury Undersecretary John Taylor suggested to reporters Thursday that a good schedule might be to have China attend two meetings each year.
Taylor said the administration believed China could move immediately to allow its currency's value to be set by market forces. He said the IMF had come to a similar conclusion in its latest global economic survey.
President Bush told the American Society of Newspaper Editors on Thursday that his administration was "pressing" China to allow the value of its currency to be set by market forces.
The political urgency of the situation was underscored by a lengthy hearing before the House Ways and Means Committee in which Democratic and Republican lawmakers said something must be done to deal with America's soaring trade gap with China.
Bills have been introduced in both the House and Senate to impose economic sanctions on China if it does not move to a floating currency. One proposal would slap 27.5 percent across-the-board tariffs on Chinese goods coming into the United States until China revamped its currency system.
"People want something more than rhetoric," said Rep. Sander Levin, D-Mich.
© 2005 The Associated Press
posted by Eastlaw at Tuesday, April 26, 2005
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