China knows yuan move in its interest, Biden says
WASHINGTON (Reuters) - China understands a stronger yuan is in its best interest although President Hu Jintao made no specific commitment to let the currency rise more rapidly, U.S. Vice President Joe Biden told Reuters on Thursday.
"It needs to be more," Biden said during a brief visit to Capitol Hill where lawmakers met with Hu one day after his visit to the White House. "We had significant discussions about that in our bilateral meetings. And it is being worked hard."
When asked whether Hu had made any commitments, Biden replied, "Nothing specific."
The Obama administration has argued that China ought to let the yuan rise more rapidly to help tamp down inflation and spur domestic demand. Chinese consumer prices in December rose 4.6 percent from a year earlier, slowing from a 28-month high notched in November but still uncomfortably high.
Separately, a U.S. Treasury Department official said the Obama administration does not expect China to switch overnight to a freely floated currency but should let the revaluation process proceed more rapidly than it has done.
"China still closely manages the level of its exchange rate and restricts the ability of capital to move in and out of the country," Treasury Assistant Secretary Charles Collyns told a meeting of the German Marshall Fund.
"These policies have the effect of keeping the Chinese currency substantially undervalued," he said.
The United States has been pushing for years for China to let the value of its yuan currency rise more rapidly. Critics -- especially on Capitol Hill and among U.S. manufacturers -- argue that an artificially undervalued yuan boosts China's exports to the United States and crimps the ability of U.S. firms to sell their goods in China.
Collyns said the United States recognizes that it would be difficult for China to immediately float its currency but repeated that it should be permitted to move more flexibly in response to market forces.
"It's a process ... that needs to work smoothly," he said. Beijing said last June it would introduce more flexibility into its currency system but the yuan has risen in value by only about 3.5 percent since then.
U.S. lawmakers apparently muted their concerns about China's currency policy during Thursday's meetings with Hu. Members of the U.S. House of Representatives skipped the currency question, but an aide said Senate Majority leader Harry Reid raised it in his meeting with Hu.
President Barack Obama homed in on the sensitive topic on Wednesday during a joint news conference with China's leader, telling Hu that China's yuan remains undervalued.
While Hu listened to Obama's complaints, he gave no clues about Beijing's intentions on the hot-button issue.
Collyns said that China's efforts to control the rise in the yuan has caused money to flood into other emerging market economies, leading to an appreciation of their currencies and undermining their ability to compete with China.
(Additional reporting by Mark Felsenthal; Editing by Kenneth Barry)
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