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Bush to 'deal with' China currency issue

http://www.reuters.com/financeNewsArticle.jhtml?
type=businessNews&storyID=3390779

WASHINGTON, Sept. 4 (Reuters) -- President Bush said
on Thursday that China's currency policy was unfair and
Washington would "deal with it accordingly" following
inconclusive talks in Beijing.

Bush, in an interview with CNBC, said Treasury Secretary
John Snow used meetings in Beijing to "deliver a strong
message from the administration that we expect our
trading partners to treat our people fairly -- our
producers and workers and farmers and manufacturers
-- and we don't think we're being treated fairly when
a currency is controlled by the government."

"We believe the currency ought to be controlled by (the)
market and ought to reflect the true values of the
respective economies," Bush said, adding: "I'm waiting
for him (Snow) to return and I look forward to hearing
their response to him and then we'll deal with it
accordingly.

In talks with Snow, China agreed that its currency, the
yuan, should eventually float freely, but resisted U.S.
calls to speed up the process.

Bush is under pressure domestically to stem the loss
of U.S. manufacturing jobs in the run-up to the 2004
presidential election. Manufacturing is an important
political and fund-raising base for the president.

At the same time, Bush is wary of antagonizing
China while it is serving as a broker in nuclear talks
with North Korea.

U.S. manufacturers, which allege that China is
intentionally distorting markets and trade flows to
make Chinese goods cheaper in U.S. markets, have
threatened to file a formal trade complaint that could
lead to trade sanctions.

Administration officials are considering how to step
up the pressure on Beijing.

Bush could raise the currency issue directly with
China's president, Hu Jintao. They are expected to
meet on the sidelines of an economic summit in