April 4th, 2010
01:59 PM ET
4 years ago

Geithner delays report, sidesteps China currency policy

Washington (CNN) - President Barack Obama's senior economic adviser said Sunday that the government was delaying a report to Congress on exchange-rate policies of U.S. trading partners to provide more time to address China's alleged manipulation of its currency.

Lawrence Summers, the director of the National Economic Council, told the CNN program "State of the Union" that major international meetings coming up, including a G-20 economic gathering that will include China, provided the opportunity to resolve trade differences that could be exacerbated by releasing the exchange-rate report as scheduled on April 15.

Summers called the upcoming meetings opportunities to engage China and other countries that have large trade surpluses with the United States.

U.S Treasury Secretary Tim Geithner announced the delay of the report to Congress on Saturday. Many lawmakers had hoped the report would publicly admonish China for allegedly manipulating its currency to the detriment of the United States.

Geithner, explaining the delay, said the upcoming meetings are "the best avenue for advancing U.S. interests at this time."

On Sunday, Summers denied that the delayed report had any connection to the U.S. desire for China to support tougher sanctions against Iran over the Tehran government's refusal to comply with international regulations regarding its nuclear energy program. His comment was in response to a question on the ABC program "This Week."

China has opposed more sanctions, but last week signaled a willingness to negotiate the issue within the U.N. Security Council, according to Susan Rice, the U.S. permanent representative to the United Nations.

Lawmakers from both parties have called on the Obama administration to speak out against China's refusal to let its currency appreciate. China has kept its yuan about 6.83 to the dollar for almost two years. Many U.S.
economists say the currency is undervalued by as much as 40 percent.

Keeping its currency low makes China's goods cheaper on the world market and more likely to be purchased by other countries. But, analysts say, it hurts American businesses, which cannot then compete.

Some analysts have argued that this is costing the United States 1.5 million jobs and impeding the country's economic recovery.

"Everyone knows China is manipulating the value of its currency to gain an unfair advantage in international trade," said Iowa Senator Chuck Grassley, adding he was disappointed in the treasury secretary's decision.

"If we want the Chinese to take us seriously, we need to be willing to say so in public," said Grassley, the ranking Republican member of the Senate Finance Committee. "The past few years have proven that denying the problem doesn't solve anything."

Chinese officials have insisted the United States is using Beijing as a scapegoat for its own economic problems.

"The Chinese government will not succumb to foreign pressure to adjust our exchange rates," said Zhong Shan, vice minister of commerce, late last month.

Premier Wen Jiabao has been equally stern in his response.

"We oppose the practice of finger-pointing among countries or strong-arm measures to force other countries to appreciate currencies," he told reporters last month.

In his statement, Geithner acknowledged China has maintained an "inflexible exchange rate."

"A move by China to a more market-oriented exchange rate will make an essential contribution to global rebalancing," he said.

Sander Levin, chairman of the House Ways and Means Committee, said the delay was meant to see if the international community can address the issue in the coming months.

"If the multilateral effort does not result in China's making significant changes, the administration and Congress will have no choice but to take appropriate action," said Levin, a Democratic lawmaker from Michigan.

soundoff (One Response)
  1. Dennis in AZ

    Senator Grassley? If we want the Chinese to take us seriously, we need to repay all the outstanding debt first. With all that debt looming over our head, it's hard for them to do anything but what banks have already done to the American people vis-a-vis the home mortgage mess. Would you go up to your banker and complain that he's making it impossible for you to make a profit? And, if you did, do you really think he or she would care? By the way, if everyone already knows that China is manipulating their currency, why does Geitner have to go to hearing? Is that government efficiency at work? OMG–MFP!

    April 4, 2010 03:31 pm at 3:31 pm |