China is going to adopt new currency system

China is likely to move within months to adopt a more flexible currency system as U.S. officials have been prodding it to do, Treasury Secretary John Snow said Thursday.

However, skeptical lawmakers said the Chinese were not likely to scrap their &to=http:// english.pravda.ru/main/2002/11/27/40057.html ' target=_blank>current system unless the Bush administration applies more pressure, and even Snow himself said of his prediction of change: "I may have to eat those words in six months."

Appearing at a &to=http:// english.pravda.ru/world/2001/12/18/23886.html ' target=_blank>Senate Banking Committee hearing, Snow defended the administration's decision last week to declare in a semiannual report to Congress that China was not now manipulating its currency to gain unfair trade advantages, reports the Forbes.

In a calculated shift, administration officials have stopped demanding that China let its currency, the yuan, float freely against other major currencies.

Instead, American officials are telling Chinese leaders that they can keep their policy of a fixed exchange rate - at least for now - if they increase the value of the yuan by 10 to 15 percent.

The policy switch reflects a growing realization that Beijing is simply not going to let its currency soar, which would make its exports more expensive and could disrupt China's troubled banking system.