Nov 12, 2004
Yahoo Finance
WASHINGTON, Nov 12 (Reuters) - The U.S. Trade Representative's Office on Friday denied a request for a probe into China's currency tie to the dollar, saying White House efforts to press Beijing for change were paying off.
About 20 Democratic members of the House of Representatives, seven Democratic senators and South Carolina Republican Sen. Lindsey Graham asked in late September for an investigation into whether the peg between China's yuan and the dollar violated trade laws.
Saying such a probe could be "more damaging than helpful," USTR said it would not accept the petition.
"As we have previously made clear, the administration believes China must move faster to adopt a flexible, market-based exchange rate and we have acted aggressively to persuade the Chinese government to undertake the complex transition toward that goal," USTR spokeswoman Neena Moorjani said in a statement.
She said Beijing, working closely with U.S. Treasury Department officials, has already implemented changes to liberalize rules on foreign exchange transactions, worked to shore up its financial sector and raised interest rates, among other steps "toward increasing flexibility in financial policy-making."
"These are clear signs that the administration's efforts are paying dividends," Moorjani said.
She said the administration, led by Treasury Secretary John Snow and his department, will keep working with Congress on the issue and will push toward the goal of a flexible yuan.
U.S. manufacturers and labor groups have complained that Beijing's decade-old practice of pegging its currency at 8.28 to the dollar gives Chinese exporters an unfair edge in global markets by making their goods artificially cheap.
The lawmakers' petition, spearheaded by Sen. Charles Schumer, a New York Democrat, and Rep. Sander Levin, a Michigan Democrat, was a revamped and resurrected version of a similar bid in early September by labor unions along with steel and textile manufacturing groups.
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