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Thursday May 3, 9:09 PM
China to take up currency row directly with US CongressChina is expected to confront head on with the US Congress on the thorny issue of Beijing's undervalued currency, which American lawmakers complain is hurting the US economy. Tough-talking Chinese Vice Premier Wu Yi is to meet with key Congressional panels during her visit to Washington this month for a "strategic economic dialogue" launched by the two powers in December, Treasury Secretary Henry Paulson said.
He said Wu Yi's meetings with the American lawmakers "can make a real difference" in helping address the currency issue, a key component of increasing US trade concerns with China that had seen Beijing being dragged to the World Trade Organization by Washington on various fronts. Commenting on Congressional pressure on the administration of President George W. Bush to prod China to do more to make its yuan currency reflect market forces, Paulson said Beijing understood the American legislative concerns. "So what I explained to the Chinese is that it is very much in their best interest if Congress believes, that the American people believe that we can make more progress through negotiations than we can through legislation or punitive measures and so on," he said. Some US lawmakers charge that Beijing has undervalued its currency by up to 40 percent in order to boost its exports and that this is a key reason for the snowballing bilateral US trade deficit that hit 232 billion dollars in 2006. Over the next few weeks, lawmakers plan to consider a bipartisan legislation against China over the currency dispute. They say the legislation will be well-crafted, WTO-compliant and difficult for Bush to veto. A bill in the last Republican-dominated Congress aimed at punishing China with a tariff if it did not revalue its currency surprisingly won two-thirds support in the Senate in a mere procedural vote. But it was held back to give Beijing time to undertake currency reforms. Paulson said although he detected growing concerns among US lawmakers during meetings with them on the Chinese currency problem, "people are still open minded" about the importance of "making progress through negotiations." He refused to speculate on the prospect of lawmakers going ahead with punitive legislation against China even after meetings with Wu Yi. "I don't really want to speculate about what legislation might look like and what would be more acceptable and less acceptable," he said. But Paulson, the former head of US investment house Goldman Sachs and who enjoys close personal ties with some of the top Chinese leaders, warned against protectionism. "I am a very strong believer that trade benefits us greatly and isolation and protectionism is going to hurt our standards of living and hurt people at all income levels, particularly the average workers," he said. On the strategic economic dialogue, he underlined the need for "signposts" of short-term progress for deepening bilateral ties. Robert Zoellick, the former deputy US secretary of state and key architect of US policy on China, told the forum that he sensed that the policy consensus in China was edging towards greater currency appreciation. "But it will need to move more quickly to counter the sense of unfairness that is driving the United States towards trade actions and perhaps restrictions," he said.
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