US lashes out at China over yuan

Congress fury

Both Democrats and Republicans on the Senate Finance Committee warned Geithner that Congress’ patience was wearing thin.

One critic said if China does not move soon to allow its currency to rise in value against the dollar, Congress is likely to pass legislation that would impose tough trade sanctions on China.

“I am confident that this bill will pass the Senate with overwhelming support,” Senator Charles Schumer, a leading Democrat, told Geithner.

“The issue here is not US protectionism but China’s flouting of the rules of free trade.”

Schumer has said he hopes to get a Senate vote in the next two weeks.

Geithner was criticised by several lawmakers over his decision in April to delay release of a report Treasury is required to present to Congress every six months with the administration’s findings on whether any country is manipulating its currency.

Senator Jim Bunning, a Republican, accused Geithner of violating the law by delaying the currency report.

He said the administration’s inaction was trading away American jobs, citing one estimate that 2.4 million manufacturing jobs have been lost in the United States because of China’s unfair trade practices including currency manipulation.

China did allow its currency, the yuan, to rise in value from July 2005 until the summer of 2008 by about 20 per cent but then abruptly halted the practice with the onset of the global economic downturn out of concern about the impact a stronger Chinese currency would have on its exports.

In April, Hu Jintao, the Chinese president, said that China was committed to exchange rate reform but that his country would adjust its policy at its own pace.