Treasury Secretary Timothy F. Geithner told lawmakers Thursday morning that China in recent days has allowed a more rapid rise in its exchange rate, apparently in response to the pressure raised by congressional hearings this week on the matter.
The Chinese yuan has risen 1 percent against the dollar just in the past 10 days since the hearings were announced, Mr. Geithner told the Senate Banking Committee, bringing its rise so far this year to 1.5 percent.
U.S. exports to China also have been growing far more rapidly than imports in the past five years and have surpassed $53 billion so far this year, making China one of the top three export markets for U.S. farmers and manufacturers, he said.
Still, China is not moving quickly enough to correct the undervaluation of its currency or address other trade-distorting practices raised in U.S. complaints, the Treasury secretary said.
“We are concerned, as are many of China’s trading partners, that the pace of appreciation has been too slow and the extent of appreciation too limited,” Mr. Geithner said.
Sen. Christopher J. Dodd, Connecticut Democrat, who is Senate Banking Committee chairman, said it was “egregious” that China continues to artificially depress the value of its currency to gain an advantage in trade.
“There’s no question that the economic and trade policies of China represent clear roadblocks to our recovery,” he said. “China does basically whatever it wants, while we grow weaker and they grow stronger.”
China maintained strong growth even while the United States and other developed countries were in recession in the past three years, enabling the Asian giant to become the second-largest economy in the world this spring. Japan long held that spot.
Sen. Richard C. Shelby, Alabama Republican, questioned why the Obama administration, like the George W. Bush administration before it, has refused to officially designate China as a currency “manipulator” and take action against it under a law designed to prevent other countries from manipulating their currencies to gain an advantage in trade.
“There is no question that China manipulates its currency to subsidize its exports,” Mr. Shelby said. But Mr. Geithner said current law does not give the Treasury Department the tools it needs to address China’s efforts to keep its currency mostly fixed against the dollar.
“It may be time for new legislation to make ensure that Treasury looks out for American workers, not Chinese creditors,” Mr. Shelby said, referring to China’s role as the largest buyer of U.S. Treasury bonds.
• Patrice Hill can be reached at phill@washingtontimes.com.
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