Panel urges US to label China currency manipulator
The United States should use all available tools, including labeling China a currency manipulator, to put pressure on Beijing to raise the value of its yuan, a US watchdog panel said on Wednesday.business Updated: Nov 17, 2010 20:26 IST
The United States should use all available tools, including labeling China a currency manipulator, to put pressure on Beijing to raise the value of its yuan, a US watchdog panel said on Wednesday.
"China's deliberately undervalued (yuan) has unfairly conferred substantial economic advantages on China to the detriment of major trading partners, principally the United States and Europe," the US-China Economic and Security Review Commission said in an annual report.
The recommendation follows the US Treasury Department's decision last month to delay a semi-annual report on whether China or any country is manipulating its currency for an unfair trade advantage. The Treasury report originally was due October 15.
The department said at the time it wanted to wait until after Group of 20 and Asia Pacific Economic Cooperation meetings to issue its latest determination.
Those meetings recently concluded but the department has not set a new date for the report's release. It delayed the previous report due on April 15 for more than two months.
China says it manages its currency to maintain domestic economic stability and employment, and has signaled that a US decision to formally label it a currency manipulator would strain relations.
In June, Beijing loosened the yuan against a peg to the dollar but it has risen only about 2.78 per cent since then, frustrating critics who say it needs to rise by 15 per cent to 40 per cent to help bring global trade into balance.
"China's undervalued (yuan) makes China's exports cheaper and imports more expensive and it encourages foreign direct investment into China, resulting in the loss of investment and jobs in Europe and the United States," the US China Economic and Security Review Commission said.
It recommended the United States work with its trading partners to put pressure on China through "all relevant international institutions" to revalue its yuan.
It also said Washington should consider using its unilateral tools, such as labeling China a currency manipulator and formally investigating what steps the United States could take to ensure "that China's currency manipulation, undervaluation, or misalignment does not adversely affect the competitiveness of US producers."
The Treasury Department has not labeled any country a currency manipulator since July 1994, when it cited China. The designation carries no immediate penalties but would require the Treasury Department to step up pressure on China to raise the value of the yuan.
The US House of Representatives passed legislation in September threatening duties on some Chinese exports to offset currency undervaluation, but the Senate appears unlikely to pass the bill before it adjourns for the year.
That legislation would die without Senate approval, requiring lawmakers to make a fresh start next year.
First Published: Nov 17, 2010 20:24 IST