US Treasury delays China exchange rate report
US Treasury Secretary Tim Geithner delayed a report on exchange rate policies scheduled for next week, sidestepping a decision on whether to accuse China of manipulating the value of the yuan.
In a statement yesterday, Mr Geithner urged China to move toward a more flexible currency and said a series of meetings over the next three months will be "critical" to bringing policy changes that lead to a stronger, "more balanced" global economy.
The delay comes as Chinese President Hu Jintao is scheduled to visit Washington for a nuclear summit on April 12 and Mr Geithner faces demands from congress to label China a "currency manipulator" for keeping the value of the yuan little changed from about 6.83 to the dollar for almost two years.
Mr Geithner is hoping to avoid the crisis with China that such a statement might produce. Instead, he is betting that China will soon take its own steps to strengthen its currency, analysts said.
Mr Geithner's draft statement said countries such as China "with inflexible exchange rates" can promote global growth by "combining policy efforts to strengthen domestic demand with greater exchange rate flexibility".
"A move to a more market-oriented exchange rate will make an essential contribution to global rebalancing," he said.
But politicians from both parties said Mr Geithner is wrong to expect that negotiations will prompt such a move from China's leaders.
"We are disappointed, but not surprised, by the administration's decision," Senator Charles E Schumer, a New York Democrat, said.
"After five years of stonewalling, punctuated by occasional, but halting action by the Chinese, we have lost faith in bilateral negotiations on this issue."
Mr Schumer, along with four other senators, last month introduced legislation to require the treasury to determine if a nation had a currency misaligned with the dollar and make it easier to respond by imposing import duties.
Yu Yongding, a former adviser to the People's Bank of China, welcomed Mr Geithner's decision as "of course good news", adding that confrontation was "meaningless".
"Problems between China and the US can be solved through negotiations," Mr Yu said.
"If you want to hurt the other side, then you'll hurt yourself."