U.S. Treasury Secretary says China committed to flexible yuan

U.S. Treasury Secretary John Snow said on Monday that senior Chinese officials had shown a commitment to let market forces drive the movement of the yuan, a long-standing demand of Washington's.

He told a news conference that both Finance Minister Jin Renqing and Zhou Xiaochuan, governor of the People's Bank of China, had reaffirmed Beijing's will to further liberalize the country's financial markets and to make continued progress toward a more flexible yuan.

China revalued the yuan by 2.1 percent in July and abandoned an 11-year-old fixed peg against the dollar in favor of a managed float. Since then, though, the authorities have allowed the yuan to rise by less than 0.3 percent.

Asked why he was confident that China would indeed let the currency range more freely, Snow said: "Governor Zhou and Minister Jin reaffirmed this fundamental commitment and reviewed with me a number of initiatives under way in financial markets, particularly with respect to the trading platform ... that are preparing the way for greater currency flexibility," reports Reuters.

Accordimg to Forbes, Snow also said that possible legislation aimed at China on currency manipulation would be 'ill-conceived'.

The AFL-CIO, a top labor group in the US, is urging Congress to push ahead with legislation labelling China a currency manipulator as part of tough measures against Beijing for maintaining what some say is an undervalued yuan.

Another bill proposed by Democratic Senator Charles Schumer of New York and Republican Senator Lindsey Graham of South Carolina would impose a 27 pct tariff on all imported Chinese goods.

China revalued the yuan by 2.1 pct against the dollar in July but many critics in the US and elsewhere say it is still undervalued.

Snow declined to say what conclusions the Treasury would make in its semi-annual report on currency manipulation. The report has been postponed until November and China is expected to be a focus.

“We haven't determined what we will say yet but we will continue to look hard at the situation and try and evaluate whether or not sufficient progress is being made,” Snow said.

P.T.