The US Treasury said it would release today a semi-annual currency report that angry critics in Congress say ought to label China a "manipulator" of its exchange rate.
The report on global exchange-rate policies will be published today, Treasury spokesman Tony Fratto said on Monday.
The yuan held weaker than eight to the dollar before the release of the report.
The yuan was at 8.005 per dollar as of 3:30pm in Shanghai from 8.007 yesterday, according to data compiled by Bloomberg.
It has never breached 8 since the decade-old peg was abandoned.
The report is required twice a year under US trade law.
In November, the Treasury stopped short of labeling China a currency manipulator, a designation that would trigger formal consultations between Washington and Beijing.
But it said that China must take additional steps on revaluing its yuan currency to avoid the label in the future.
Fratto refused to divulge what Wednesday's report would say, but repeated the conciliatory tone towards China used of late by top officials including Treasury Secretary John Snow.
"We've said for a while that they are in fact moving towards greater flexibility, and that they could and should do more," he told reporters.
Several bills have been introduced in Congress that would punish China with US trade reprisals for its perceived failure to move faster on currency reform.
The complaint runs that by intervening to keep the yuan cheap against the dollar, China is unfairly fostering a boom in its exports at the expense of US industry, and contributing to a record-breaking US trade deficit.
China tinkered with its currency trading regime last July, but since then the yuan has risen only marginally against the dollar, and all the signs point to Beijing sticking to its gradualist pace of change.
Chinese President Hu Jintao (胡錦濤), visiting Washington last month, pledged to continue exchange-rate reforms and boost US imports but offered no new concrete measures.
"We think the commitment [to reform] is real. We're going to focus on action," Fratto said.
"We have stressed the virtues of flexibility in the economy, and we're seeing China moving in that direction on the currency, capital account, on banking systems, using market instruments," he said.
Late last month, China raised interest rates for the first time since October 2004 in an attempt to cool its fast-growing economy.
Fratto said the impact on the economy and exchange rates would be limited.
"But it's interesting as a political signal," he said.
"We see it as a very positive development in sending a signal to financial markets, to their banks, that they are pointing towards greater reliance on market mechanisms," he said.
To list China as a currency manipulator, the Treasury must conclude that it is distorting the yuan-dollar exchange rate "for purposes of preventing effective balance-of-payments adjustments or gaining unfair competitive advantage in international trade."
If currency manipulation is established, the 1988 Omnibus Trade and Competitiveness Act would require the Treasury secretary to initiate negotiations with China.
The negotiations could be conducted via the IMF or bilaterally. The aim would be to ensure that countries concerned "regularly and promptly adjust" the exchange rate "to eliminate the unfair advantage."
That section of the US trade act does not spell out the consequences if the negotiations should fail. But other parts of the act put an array of measures including trade sanctions at the government's disposal.
Foreign Exchange Analytics analyst David Gilmore said the Treasury report had become more about politics than about economics, as the government tries to find ways of balancing congressional anger with not alienating China.
"The Treasury may well gamble that Congress will be sated by calling the yuan a `misaligned' currency if not naming China a manipulator," he said.
SECURITY: As China is ‘reshaping’ Hong Kong’s population, Taiwan must raise the eligibility threshold for applications from Hong Kongers, Chiu Chui-cheng said When Hong Kong and Macau citizens apply for residency in Taiwan, it would be under a new category that includes a “national security observation period,” Mainland Affairs Council (MAC) Minister Chiu Chui-cheng (邱垂正) said yesterday. President William Lai (賴清德) on March 13 announced 17 strategies to counter China’s aggression toward Taiwan, including incorporating national security considerations into the review process for residency applications from Hong Kong and Macau citizens. The situation in Hong Kong is constantly changing, Chiu said to media yesterday on the sidelines of the Taipei Technology Run hosted by the Taipei Neihu Technology Park Development Association. With
CARROT AND STICK: While unrelenting in its military threats, China attracted nearly 40,000 Taiwanese to over 400 business events last year Nearly 40,000 Taiwanese last year joined industry events in China, such as conferences and trade fairs, supported by the Chinese government, a study showed yesterday, as Beijing ramps up a charm offensive toward Taipei alongside military pressure. China has long taken a carrot-and-stick approach to Taiwan, threatening it with the prospect of military action while reaching out to those it believes are amenable to Beijing’s point of view. Taiwanese security officials are wary of what they see as Beijing’s influence campaigns to sway public opinion after Taipei and Beijing gradually resumed travel links halted by the COVID-19 pandemic, but the scale of
A US Marine Corps regiment equipped with Naval Strike Missiles (NSM) is set to participate in the upcoming Balikatan 25 exercise in the Luzon Strait, marking the system’s first-ever deployment in the Philippines. US and Philippine officials have separately confirmed that the Navy Marine Expeditionary Ship Interdiction System (NMESIS) — the mobile launch platform for the Naval Strike Missile — would take part in the joint exercise. The missiles are being deployed to “a strategic first island chain chokepoint” in the waters between Taiwan proper and the Philippines, US-based Naval News reported. “The Luzon Strait and Bashi Channel represent a critical access
Pope Francis is be laid to rest on Saturday after lying in state for three days in St Peter’s Basilica, where the faithful are expected to flock to pay their respects to history’s first Latin American pontiff. The cardinals met yesterday in the Vatican’s synod hall to chart the next steps before a conclave begins to choose Francis’ successor, as condolences poured in from around the world. According to current norms, the conclave must begin between May 5 and 10. The cardinals set the funeral for Saturday at 10am in St Peter’s Square, to be celebrated by the dean of the College