China’s currency manipulation: US floats on hope
06 Feb 2010
US officials may have adopted the 'hopeful' route to resolving the thorny problem of getting China to stop manipulating its currency, with Treasury secretary Timothy F Geithner saying Thursday that he thought it ''quite likely'' that Beijing would allow its currency to appreciate vis-à-vis the dollar. His comments come in the wake of comments by president Barack Obama that fair valuation of currencies was imperative for the US economy, as it would make the country's exports more competitive and help lower massive trade deficits, in particular with China.
"I think it's actually quite likely [China] will move. I think they recognize it's important to them, in their interest as well," Geithner told the Senate Budget Committee.
The issue of China's overvalued currency, known as the yuan or the renminbi, is moving centre stage with the US administration which is seeking ideas to counter the ''jobless recovery'' currently under way in the domestic economy. Indeed, just released figures for January this year reveal that the US economy shed another 20,000 jobs, though other muddled statistics reveal that unemployment may have improved marginally to 9.7 per cent, from 10 per cent.
In all, the US economy has lost 8.4 million net jobs since the recession began officially in December 2007.
In his State of the Union address, Obama vowed to double US exports by 2014. Economists are in general agreement, however, that this target won't be achieved battling a cheap yuan.
Geithner's comments were made only a day after Obama vowed to "get much tougher" on China over this issue "to make sure our goods are not artificially inflated in price and their goods are not artificially deflated in price; that puts us at a huge competitive disadvantage."
