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No-confidence vote topples Canadian government; election likely Jan. 23
By Glenn Somerville
Reuters
Monday, November 28, 2005
http://today.reuters.com/business/newsarticle.aspx?
type=tnBusinessNews&storyID=nN28146785&imageid=&cap=
WASHINGTON -- The U.S. Treasury on Monday declined to name China a
currency manipulator, despite the demands of many U.S. lawmakers,
but served notice that it will keep pressuring Beijing to let its
currency rise in value.
An intently awaited Treasury report on currency practices found that
no country was currently gaining an unfair trading edge by keeping
its currency artificially low, and said China's decision in July to
drop a peg between its currency -- called the yuan or renminbi --
and the dollar played a role in Treasury's assessment.
"The initial steps by China to increase its exchange rate
flexibility played an important part in this decision," U.S.
Treasury Secretary John Snow said in a statement accompanying the 31-
page report to Congress.
"But it is also contingent on further progress to incorporate
flexibility reflecting underlying market forces in China's RMB
exchange rate by the time of the next foreign exchange report," he
added.
Treasury had warned in May that China faced being named a currency
manipulator -- which would open it to punitive trade sanctions --
unless it amended its currency policies before Monday's report was
issued.
Since that time, Beijing has dropped the yuan peg and Snow and
President George W. Bush have visited China and urged it to speed up
the process of letting market forces determine the yuan's value. The
currency report was due in mid-October but was delayed because of
the official U.S. visits.
U.S. producers continue to insist that the yuan is anywhere from 25
to 40 percent undervalued, making China's goods cheaper in America's
booming consumer markets and costing hundreds of thousands of
American jobs.
"We're very disappointed frankly that Treasury didn't cite them,"
said Patricia Mears, director of international commercial affairs at
the National Association of Manufacturers. "We thought what
Secretary Snow basically said in May was the end of the road was in
October."
In July China revalued the yuan by 2.1 percent, allowing it to trade
within tightly managed bands. Since then, the yuan has barely moved
and risen only a further 0.33 percent against the dollar.
Treasury said the revised Chinese currency system remained "highly
constricted" and created distortions in how currency is traded in
the Asian region.
"This is troubling, and future reports will intensely scrutinize
whether and to what degree China is practicing what officials have
repeatedly committed to undertake," the currency report said.
On Capitol Hill, Democratic Sen. Charles Schumer of New York, who
has threatened to reintroduce legislation he co-sponsored with
Republican Sen. Lindsey Graham of South Carolina to impose 27.5
percent tariffs on Chinese imports, said Treasury was avoiding
reality.
"The administration's lack of action today hurts all Americans by
refusing to acknowledge the obvious -- that China manipulates its
currency," Schumer said.
Graham was harsher, saying China's currency tactics were "creating
havoc for American manufacturers" and warning that anger was
mounting.
"I expect in the near future, unless some dramatic change occurs,
the Congress will speak loudly and forcefully on China's continuing
currency manipulation," Graham said.
Treasury now wants the International Monetary Fund to make more
efforts to persuade China to let its currency strengthen, using its
authority to apply surveillance to member countries' currency
practices.
A week ago, the IMF did say China should let its currency be
influenced more significantly by market forces, roughly the same
thing the U.S. Treasury has been saying.
Snow, who leaves on Wednesday to attend a meeting in London of Group
of Seven finance ministers where currency issues will be discussed,
said growing global current account imbalances were a sign of uneven
global growth, but said that was not the United States' fault.
"The adjustment of global imbalances is a shared responsibility,"
Snow said. "Domestic demand growth in Europe and Japan, though
somewhat improved, still falls far short of what is needed."
The G7 comprises the United States, Britain, Canada, France,
Germany, Italy, and Japan. Key emerging economies including China,
India, Brazil, and South Africa also are expected to attend part of
the meetings that extend over Dec. 2-3.
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