BEIJING-The Bush administration on Monday determined that China was not manipulating its currency to gain economic advantages but still pressed the Chinese to move more quickly to allow the yuan's value to be set by market forces.
The administration's determination, made in a currency report it is required to submit to Congress every six months, disappointed critics who contend that Chinese currency practices play a large role in America's soaring trade deficits.
"The administration's lack of action today hurts all Americans by refusing to acknowledge the obvious ¡ª that China manipulates its currency," said Sen. Chuck Schumer.
Schumer, D-N.Y., is a leading sponsor of legislation that would impose 27.5 percent tariffs on all Chinese imports unless China does more to allow its currency to rise in value against the dollar.
Treasury Secretary John Snow said China's decision to allow a small revaluation of its currency last July had been a factor in deciding not to brand China a currency manipulator, but he said more must be done.
The United States had a trade deficit of $162 billion with China last year, the largest ever recorded with a single country, and this year's deficit is expected to approach $200 billion.
China in July announced that it was allowing its currency, which had been pegged tightly to the U.S. dollar, to rise in value by 2.1 percent. The Chinese said they would allow the currency to fluctuate by as much as 0.3 percent on a daily basis. However, over the past four months, the Chinese yuan has been essentially unchanged in value.
Snow led a U.S. group which included Federal Reserve Chairman Alan Greenspan to China in October to urge the country's government to allow a greater revaluation of the yuan. President Bush made a similar appeal to Chinese leaders this month when he visited China.
"It is imperative that China move toward greater flexibility as quickly as possible," Snow said in a statement accompanying Monday's report.
He said the administration would focus on China's actions in preparing the next currency report to Congress, which will be due in April. He said China's leaders have "committed repeatedly" to introducing more flexibility.
Briefing reporters on Monday's finding, Treasury Undersecretary Timothy Adams said it was "absolutely critical" before the next report is due in April that Chinese authorities put in place the flexible type of currency system that they have promised.
He refused to say specifically what China would need to do to avoid being designated a currency manipulator in the next report, saying, "I don't have a particular standard in mind. It is kind of like obscenity. We will know it when we see it."
But Adams said the administration remained opposed to the Schumer bill with across-the-board tariffs. He called that approach protectionist and isolationist and said it would probably prompt retaliatory tariffs by the Chinese on American goods. Enditem
(Photo source:AFP/A man lays out various denominations of the Chinese yuan, in Beijing. )