China not cited as currency manipulatorAssociated Press
Published December 20, 2006
WASHINGTON - The Bush administration said Tuesday that China does not meet the technical requirements of a country that is manipulating its currency to gain unfair trade advantages.
The administration did say that "more flexibility in China's exchange rate will help it achieve more balanced growth" and promote a number of other outcomes that would be economically beneficial.
But in the report it is required to deliver to Congress every six months, the administration said that no country met the "technical requirements for designation" as a currency manipulator.
Such a designation could trigger negotiations that could lead to trade sanctions.
The report was released four days after a Cabinet delegation led by Treasury Secretary Henry Paulson concluded high-level talks in Beijing aimed at resolving the causes of America's huge and growing trade deficit with China.
The report did not please China's harshest critics in Congress.
"The administration continues to use technical and legalistic dodges to avoid saying what everyone knows to be true: The Chinese manipulate their currency. It's as plain as the nose on your face," Sens. Chuck Schumer, D-N.Y., and Lindsey Graham, R-S.C., said in a joint statement.
"If the administration still won't call China a manipulator, how can we ever expect them to get China to play fair?" they asked.
Schumer and Graham were the lead sponsors of legislation last year that would have imposed 27.5 percent penalty tariffs on all Chinese imports if China did not move more quickly to allow its currency to rise in value against the dollar.
The administration opposed the legislation on the grounds that it would raise the price of Chinese imports to American consumers.
American manufacturers contend China undervalues its currency by as much as 40 percent against the dollar, which makes Chinese goods cheaper for American consumers and American goods more expensive in China.
America's trade deficit with China is expected to easily surpass last year's $202-billion record, the highest trade gap the United States has ever recorded with a single country.
The administration is under heavy political pressure to do something about America's record trade deficits, which critics charge have been a major factor in the loss of nearly 3-million manufacturing jobs since Bush took office in 2001.
No country has been cited as a currency manipulator in the Treasury Department report since China was cited in 1994 by the Clinton administration.