Friday, 19 Mar 2010

Wall Street Journal reported that a bipartisan group of 130 members of the US House of Representatives recently urged the Obama administration to wage a multi front fight against China's currency policy Monday, calling for outright tariffs on imports if other measures fail to convince the increasingly defiant Chinese government to budge on the issue.

In a letter sent to Treasury Secretary Mr Timothy Geithner and Commerce Mr Secretary Gary Locke, the lawmakers urged the agencies to use all available resources to seek an end to what they see as currency manipulation by China to promote exports through an undervalued exchange rate.

The letter urged Mr Geithner to slap the manipulator label on China in next month's semi annual currency report, something he has so far resisted doing formally after announcing shortly after Mr Obama took office that the president believes the yuan is being manipulated.

The letter said Mr Locke should start making currency manipulation a trigger for the Commerce Department to impose countervailing duties on imports.

Those actions should be done as part of a comprehensive effort, the lawmakers said, urging a diplomatic push with not just China, but also with other countries and the International Monetary Fund.

It said “If these efforts are not successful, we ask the administration to consider all the tools at its disposal, including the application of a tariff on Chinese imports, to respond to China's currency manipulation. The economic impact of the yuan undervaluation on American businesses and workers is too great for the administration not to pursue a comprehensive effort.”

On the other hand Chinese Premier Mr Wen Jiabao warned against finger-pointing over currencies over the weekend, saying the yuan isn't undervalued.