DJ US Pressuring China To Move Toward Currency Flexibility
WASHINGTON (AP)--The Bush administration is trying to step up pressure on China to overhaul a currency system that American manufacturers contend gives Chinese companies a huge competitive advantage.
The administration was heading Friday into a second day of talks with a high-level delegation of Chinese officials. Several members of Congress say the Chinese are dragging their feet and they believe it is time to file an unfair trade case.
The dispute involves China's system of pegging the value of its currency, the yuan, tightly to the U.S. dollar. American manufacturers say that practice keeps the yuan undervalued by as much as 40 percent, giving Chinese companies a huge price advantage over American products.
Treasury Secretary John Snow and Federal Reserve Chairman Alan Greenspan began talks Thursday with a group of Chinese officials led by Finance Minister Jin Renqing.
U.S. officials were to be joined Friday night at a dinner where the Chinese will be special guests of the Group of Seven leading industrial countries -the United States, Japan, Germany, France, Britain, Italy and Canada.
It will the first time China has attended a G-7 meeting and it could mark the beginning of a process in which China is eventually admitted to the group or at least the expanded Group of Eight, which also includes Russia.
However, a group of eight senators and 22 House members complained Thursday that China should be forced to immediately stop manipulating its currency to gain trade advantages. They called on the administration to bring a case against China before the World Trade Organization, which could lead to trade sanctions against Chinese goods.
Sen. Charles Schumer, D-N.Y., said the administration's attempts to use quiet diplomacy have proved to be a failure and tougher action was required.
"It is time to bring out the big stick and enforce U.S. trade laws," Schumer said.
The lawmakers pointed to a U.S. trade deficit with China which hit $124 billion last year, the highest ever recorded with any country, and is running at an even higher annual rate above $140 billion this year.
Rep. Sander Levin, D-Mich., said China's currency system was "literally shutting down family businesses that have been employing people for generations."
The issue has also arisen in the presidential campaign. Democratic candidate John Kerry charges that the Bush administration has failed to do enough to attack China and other sources of unfair foreign competition at a time when the country has seen the loss of nearly 2 million manufacturing jobs.
The finance meetings, scheduled to run from Friday through Sunday, were being held under heavy security following the revelation in August that both the IMF and World Bank headquarters were on a list of terrorist targets.
Dow Jones Newswires