The US Treasury Department said it continues to believe that the
robust Strategic Economic Dialogue (SED) is the best means of
achieving progress, when opposing a bill aimed at pressing China to
raise the value of its currency.
The Treasury said in a statement the bill represents the wrong
approach in achieving essential currency and economic reforms in
China that would reduce trade imbalances.
The US Senate Finance Committee voted 20-1 on Thursday to pass a
bill that would give the US government new tools to pressure China
to float the yuan currency in open markets.
"It distances the US from a multilateral approach and raises
serious concerns regarding US compliance with international rules
governing anti-dumping investigations," the statement said.
The Treasury said it recognized that members of Congress want to
send a strong message to China through this bill and others under
consideration, adding that Treasury Secretary Henry Paulson would
tell the Chinese leadership that "it is vital to the health of the
global economy, including the US economy, that China reform its
currency and take other steps to reduce imbalances."
Paulson will start his fourth visit to China next week and is
scheduled to hold talks with President Hu Jintao and Vice Premier
But the Treasury said it cannot support the bill's approach and
"continues to believe that direct, robust discussions with the
senior Chinese leaders, not legislation, is the best means of
The bill requires the Commerce Department to take "currency
undervaluation" into account when calculating anti-dumping duties
on foreign goods, which could lead to higher duties already in
place on many Chinese products, and encourage US companies to seek
new duties on additional Chinese goods.
The bill also would require the Bush administration to take
action through the International Monetary Fund and eventually the
World Trade Organization against targeted countries that refuse to
reform their currency policies.
The overwhelming vote shows Congress is headed toward passing
legislation by a big enough margin to overcome any presidential
veto, said Senator Charles Schumer, a New York Democrat who helped
craft the measure.
A faster appreciation of the yuan is not a panacea to the
broadening US-Chinese trade deficit or other ills, such as losses
in manufacturing jobs, Federal Reserve Chairman Ben S. Bernanke
said last week.
Vice Premier Wu told a dinner in Washington in May attended by
Paulson and Bernanke that the yuan's value was not the cause of the
She added that about 85 percent of China's surplus with the US
is from foreign companies exporting products no longer made in the
United States, such as shoes.
Meanwhile, China has made it clear on many occasions that the
country would carry out the exchange rate reform in an independent,
controllable and gradual way to maintain the yuan's strength.
The yuan has seen seesawing fluctuations versus the dollar since
China promised to deepen the exchange rate reform to allow the
yuan to fluctuate in line with market supply and demand during the
second strategic economic dialogue between the two countries.
(China Daily July 28, 2007)