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US Senators Optimistic About China's Currency Reform
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Two US senators leading efforts to force trade and currency 'concessions' from China said in Beijing Thursday they were more optimistic about China's currency reforms.

"We are more optimistic than we were when we arrived," said US senator Charles E. Schumer, "We have seen the Chinese government and people actually have a convergence with the American people on currency".

Schumer made the remarks after meeting with Chinese Vice Premier, Wu Yi and Central Bank Governor, Zhou Xiaochuan, Minister of Commerce Bo Xilai.

Schumer and another US senator, Lindsey Graham, are visiting China to discuss with top Chinese officials issues of trade, currency and intellectual property rights. They proposed a bill earlier saying the United States would impose 27.5 percent tariffs on Chinese imports if they did not appreciate the yuan. The deadline for the voting is March 31.

"We believe there is a real possibility that the Chinese government and people see it in their interest to let the yuan float," said Schumer, "so we're feeling better."

The yuan has gained more than 3 percent compared with its value before revaluation on July 21 last year. The two senators appreciated the yuan revaluation but said that 3 percent was not the final answer.

The two senators said they were pleased to see a passage about currency reform in the text of China's 11th Five-Year Guidelines. In the recently released plan China outlined its goal for currency reform and stated that it would improve the system of management of floating foreign currency exchange rates.

Also in the 11th Five-Year Guidelines the two senators noted that China had adjusted its economic policy to do more about "encouraging domestic consumption and the ratio of consumption to savings should be increased on the consumption side".

It was both to help people in the interior who were not doing as well as those on the coasts and for the future balance of China's growth, observed Schumer.

"When I came here I thought the Chinese policy was about accumulating wealth but now I see there is an added dimension," he said.

China's Central Bank on Thursday vowed to increase the "floating flexibility" of the yuan while keeping it stable.

The two senators said they believed China's currency issue would be solved over a reasonable period of time but when asked about whether the US Congress would vote their Bill Schumer said, "the jury is still out" and "we still need some concrete signs of movement."

China revalued its currency by 2.1 percent to 8.11 yuan per dollar in July last year. From 1994 until July 2005 the policy had been to informally peg the value of the yuan to the value of the US dollar.

In response to media questions on whether China would revalue its currency again at a press conference at the close of the annual session of China's top legislature one week ago, Chinese Premier Wen Jiabao said, "RMB now boasts the room and capacity for floating up or down by itself in line with current mechanism and market changes."

(Xinhua News Agency March 24, 2006)

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