The Obama administration isn’t satisfied with China’s progress in strengthening the yuan and is “intensely focused” on the issue, a Treasury Department official said.
“We’ve made progress on the currency issue but that does not mean we are satisfied,” Lael Brainard, the Treasury’s undersecretary for international affairs, said in a speech in Washington today.
In a report to Congress on Feb. 5, the Treasury Department said China had made “insufficient” progress in allowing its currency to rise. The report declined to brand China a currency manipulator.
“We will remain intensely focused on this issue to ensure accelerated progress to address the remaining substantial undervaluation,” Brainard, who is Treasury Secretary Timothy F. Geithner’s top international adviser, told the U.S.-China Business Council. She said the yuan has strengthened 3.7 percent against the dollar in nominal terms since June. Taking inflation in China into account, the real bilateral exchange rate is rising even more, she said.
The yuan strengthened today, approaching a 17-year high, as U.S. lawmakers introduced legislation aimed at pushing China to let its currency strengthen faster. China is committed to the gradual liberalization of its exchange-rate policy, Foreign Ministry spokesman Ma Zhaoxu said at a briefing today in Beijing.
U.S. Representative Sander Levin of Michigan, the top Democrat on the House Ways and Means Committee, and Democratic Senator Sherrod Brown of Ohio introduced a bill today that’s almost identical to one passed by the House last year that would let U.S. companies petition for duties on imports from China to compensate for the effect of a weak yuan. That measure died when the Senate didn’t vote before the end of the year.
The administration’s objectives on getting China to boost its exchange rate “are very much similar” to the goals of the House bill introduced last year, Brainard said in response to a question.
“We’re seeing progress” from China, she said. “We want to see more progress. We still believe that the Chinese currency is substantially undervalued. We’re going to continue using the mechanisms we have.”
The Obama administration and U.S. lawmakers say China’s currency policy gives its exporters an unfair competitive advantage. China had a $252 billion trade surplus with the U.S. in the first 11 months of 2010, according to Commerce Department data.