US President Barack Obama said on Monday that China has not done enough to raise the value of the yuan, keeping up tough US rhetoric on Chinese policy as US lawmakers weigh new legislation to punish Beijing.
A bipartisan group of former Cabinet officials warned US Congress, however, that action against China for not letting its currency rise faster could backfire on the US.
US Trade Representative Ron Kirk also said it was not clear whether various bills in Congress to pressure China on the currency issue were legal according to WTO rules.
The yuan “is valued lower than market conditions would say it should be,” Obama said, giving China an advantage in trade because it makes Chinese goods less expensive in the US and US goods more expensive in China.
“What we’ve said to them is you need to let your currency rise in accordance to the fact that your economy’s rising, you’re getting wealthier, you’re exporting a lot, there should be an adjustment there based on market conditions,” Obama said at a town-hall style meeting hosted by CNBC television.
“They have said yes in theory, but in fact they have not done everything that needs to be done,” Obama said.
Calling for a fairer trade relationship with Beijing, Obama said Washington was bringing more actions against China before the WTO.
“We are going to enforce our trade laws much more effectively than we have in the past,” he said.
With the currency issue tensing relations, Obama will meet with Chinese Premier Wen Jiabao (溫家寶) when the two attend the UN General Assembly in New York later this week.
US Secretary of the Treasury Timothy Geithner said last week he would rally other world powers to push China for trade and currency reforms.
In New York, US Secretary of State Hillary Rodham Clinton and Chinese Foreign Minister Yang Jiechi (楊潔篪) discussed currency issues at length during a meeting on the sidelines of the annual gathering of the UN General Assembly in New York.
“It was a significant part of the discussion,” US Department of State spokesman P.J. Crowley told reporters.
“Obviously it is an important aspect of our bilateral relationship,” he said. “We both understand that this is something that both substantively and politically is a vitally important element of the relationship.”
US Senate Banking Committee Chairman Chris Dodd said Congress would not pass a bill this year, but he said it might be possible for the White House and lawmakers to agree on the basic outlines of legislation before Obama goes to the G20 summit in Seoul in November.
“That might help, that would not be a bad arrow to have in your quiver going into Seoul,” Dodd said in an interview at the Reuters Washington Summit.
However, supporters of currency legislation still hold out hope the US House of Representatives will act and create pressure for the Senate to also pass a bill in the short time left before the Nov. 2 congressional elections.