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China not manipulating currency says bush { May 10 2006 } Original Source Link: (May no longer be active)
http://www.nytimes.com/2006/05/10/world/10cnd-china.htmlhttp://www.nytimes.com/2006/05/10/world/10cnd-china.html
May 10, 2006
China Not Manipulating Currency, U.S. Says
By STEVEN R. WEISMAN
WASHINGTON — The Bush administration declared today that China did not seem to be manipulating its currency exchange rates to promote exports or protect its vast dollar holdings resulting from years of trade surpluses.
The finding is likely to deepen the debate over how to deal with China's emergence as a global economic power, and to prompt a strong response from manufacturers and other interest groups that have been pressing the administration to address what they see as China's unfair trading practices.
In a semi-annual report on international economic and exchange rate policies, issued weeks after a strained summit between President Bush and President Hu Jintao, Treasury Secretary John W. Snow said China's record remained "deeply concerning" but he gave China some credit for taking steps to try to improve its record on currency issues, as well as on encouraging imports of foreign goods and opening its economy to foreign investment.
"Of course, words must be backed by action, and China is taking some action," Mr. Snow said.
The currency issue has become a major irritant with China, with major ramifications at a time when the Bush administration is tangling with China on other issues, particularly human rights, Taiwan and Iran. American officials say they have had to balance toughness on these issues with flexibility and caution, because of China's leverage, including the hundreds of billions that China holds of United States debt.
Mr. Snow said that over all China's record on currency and economic matters was "deeply concerning" but "in the final analysis" the administration was "unable to conclude that China's intent has been to manage its exchange rate regime for the purposes of preventing effective balance of payments adjustment or gaining unfair competitive advantage in international trade."
Many economic experts charge that China has indeed been manipulating its currency to gain a mercantilist advantage on trade and investment.
Meanwhile, Senators Charles E. Schumer, Democrat of New York, and Lindsey Graham, Republican of South Carolina, are leading the charge in Congress, demanding that China be pressed harder on currency, or risk having tariffs slapped on its exports. They can be expected to challenge the Treasury report's conclusion, but they have also kept their bill calling for tariffs on hold while watching how China responds.
Copyright 2006 The New York Times Company
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