The US has stepped up pressure on China to allow further movement in its currency, warning of a backlash from US lawmakers if it fails to do so, the Asian Wall Street Journal reported yesterday.
US Treasury officials are disappointed that China's promise to let the yuan move with market forces has seen only a small increase in its value since the currency was revalued eight weeks ago, it said.
US Treasury Secretary John Snow will emphasize the need for greater movement in the exchange rate at an expected meeting with Chinese Finance Minister Jin Renqing (
Snow has invited them to a gathering in Washington on Sept. 23-24 of senior economic officials from the G7 nations.
In essence, Snow plans to tell the Chinese that it is not enough to say that the yuan can rise -- they must also allow it to do so in a significant way, the report said.
After months of intense US pressure, China freed the yuan from an 11-year-old peg to the US dollar in July, revaluing by 2.1 percent and putting it in trade-weighted basket of currencies. The yuan was also allowed to move 0.3 percent either way on any given day.
Since then, however, the yuan has barely budged, the Journal said.
The US Treasury is due to release on Oct. 15 a biannual report on international currencies.
Snow promised months ago that unless China implemented significant reforms the report would "likely" cite China for manipulating its currency to gain an edge in international trade.
Such a finding would trigger a legal requirement that the US initiate formal negotiations with China over the currency question.