From overseas press

US chooses to address the yuan issue diplomatically

(chinadaily.com.cn)
Updated: 2010-04-07 10:40

US Treasury Secretary Timothy Geithner said on April 3 that he has delayed an April 15 report on whether China manipulates its currency, because several high-level international meetings in the coming months will serve a better way to advance the United States position. Some US media deemed that Washington wants to address the dispute diplomatically, rather than force a showdown. The following are the comments from several US media:

Bloomberg April 5

Geithner, by delaying a report on global currency policies, is betting international diplomacy will work better than US pressure to get China to strengthen the yuan.

The move will give China space to relax currency controls "without looking like they're kowtowing to US pressure," said David Gilmore, a partner at Foreign Exchange Analytics in Essex, Connecticut.

Gilmore said China may allow the yuan to appreciate in a "moderate" way within weeks. He said the options probably include widening the current peg's trading band or returning to the July 2008 policy of a "crawling peg" that allowed for 5 percent annual appreciation. The "least likely" alternative: revaluing the currency in a "step-like fashion," Gilmore said.

AP April 5

Geithner's announcement came a day after the White House signaled an improvement in relations between the two countries amid news that Chinese President Hu Jintao will attend a summit on nuclear security later this month in Washington.

The delay of the Treasury report could be designed to avoid embarrassing the Chinese at a time the administration is enlisting their aid on sensitive issues of nuclear security and Iran's nuclear program. Hu is scheduled to attend the summit the same week that the report normally is due.

The administration is hoping that China will again allow its currency to rise in value against the dollar as a way of narrowing the trade gap — as it did until mid-2008 when the global recession began to cut sharply into China's exports abroad.

New York Times April 3

The Treasury's action seemed intended to send a reassuring message both to China and to Congress. It signaled to China that the administration prefers to resolve the dispute diplomatically, rather than force a showdown, but also pressed the case for a change in China's policy, a position advocated by many United States lawmakers in both parties.

Nicholas R. Lardy, a senior fellow at the Peterson Institute for International Economics and an authority on the Chinese economy, said the delay made sense given China's recent steps on other American priorities, including tougher sanctions against Iran and pressure on North Korea over nuclear weapons. "Delaying the currency report is a small price to pay for what we've gotten so far," he said.

He said the statement "reflects the administration's desire to address this on a multilateral basis rather than a bilateral basis."