U.S. delays China currency report; lawmakers push bill

WASHINGTON Fri Oct 14, 2011 6:34pm EDT

Chinese one yuan coins are placed on 100 yuan banknotes in this illustrative photograph taken in Beijing December 30, 2010. REUTERS/Petar Kujundzic/Files

Chinese one yuan coins are placed on 100 yuan banknotes in this illustrative photograph taken in Beijing December 30, 2010.

Credit: Reuters/Petar Kujundzic/Files

Related Topics

WASHINGTON (Reuters) - The Treasury Department said on Friday it would delay until later this year a ruling on whether China is manipulating its currency as Democratic Party lawmakers tried to overcome Republican opposition to a bill that would punish Beijing for its currency policies.

The decision to delay the sixth semiannual report to Congress under the Obama administration, which was due on Saturday, came days after the Senate approved legislation that aims to pressure Beijing to let its yuan rise in value faster.

The delay "will give us a chance to assess progress following several international meetings," the Treasury Department said in a statement.

Ministers and leaders of the Group of Twenty major global economies and the Asia Pacific Economic Cooperation forum, bodies in which the United States and China are key players, are scheduled to meet this month and in November.

President Barack Obama and key figures in his cabinet, while stopping short of endorsing the currency bill, have voiced clear sympathy with lawmakers' contention that China undervalues the yuan to give its companies a price advantage in global markets.

"China has been gaming the trading system to hold down the value of its currency to give its companies a leg up. Its currency has appreciated, but not enough," said Secretary of State Hillary Clinton in a speech in New York on Friday.

Clinton, whose currency remarks echoed those of Obama this week, also raised concern that some provisions could violate World Trade Organization rules.

DEMOCRATS PUSH REPUBLICANS

Beijing says it is committed to gradual currency reform and has pressed the White House to block the currency bill, which it says is protectionist and against WTO rules.

The Democratic-controlled Senate on Tuesday voted 63-35 to pass the bill, which would allow the United States to slap duties on goods from countries with undervalued currencies.

But the measure has been held up in the Republican-run House of Representatives, where Speaker John Boehner opposes the measure and has branded it "dangerous."

Boehner, the most powerful Republican in Congress, could make sure the bill never comes up for a vote. A similar measure cleared that chamber last year 348-79, when it was controlled by Democrats.

U.S. Democratic lawmakers vowed on Friday to keep pressing for a vote on the currency bill, saying the legislation Republican leaders are blocking is vital for U.S. trade competitiveness.

"It is estimated that currency manipulation costs our economy over a million jobs," said Steny Hoyer, the No. 2 Democrat in the House of Representatives. "I urge the Republican leadership to put the currency bill on the floor."

Hoyer also urged Republican presidential hopeful Mitt Romney, who has promised to label China a currency manipulator on his first day in office, to press the issue with other Republicans.

"He certainly ought to talk to Mr. Boehner," Hoyer said.

A bipartisan group has reintroduced the bill the House passed last year and it currently has 225 co-sponsors, including 61 Republicans. Only 218 votes would be needed to pass the measure if it came up for a vote.

A "discharge petition" to try to force House action has garnered 175 signatures but 218 are needed. No Republicans are supporting that effort.

GEITHNER: "BIG PROBLEM WITH CHINA"

The Obama administration, in five previous reports that were also delayed, declined to take the step of formally labeling China a manipulator. Doing so would require stepped-up negotiations with China over its exchange rate.

The previous Treasury report on May 27 found China did not meet the U.S. legal definition of a currency manipulator, but said Beijing still needed to allow the yuan to rise much faster in value.

Treasury Secretary Timothy Geithner, long a proponent of a multilateral approach to get China to adjust its exchange rate, expressed what appeared to be growing impatience with China within the administration.

"We have a big problem with China as a country and an economy," he told the CNBC news network in an interview.

"It's a global problem, and it's partly because they're not letting their exchange rate rise rapidly enough," he said.

"We're very supportive of the objectives of that bill," said Geithner, while repeating administration caveats about the bill's compliance with WTO rules.

"We're open to any tool, any piece of legislation, that gives us more leverage that could be effective in helping advance our interests," he said.

(Editing by Todd Eastham; additional reporting by Mark Felsenthal)

FILED UNDER:
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article