Visiting United States lawmakers hope for signs of progress in easing China's currency policy

Two U.S. senators who are proposing possible trade sanctions on Beijing said Tuesday they hope for signs of progress toward easing China's controversial exchange-rate controls in talks this week with Chinese officials.

Photo: Visiting United States lawmakers hope for signs of progress in easing China's currency policy

A delegation including by Senators Lindsey Graham and Charles Schumer was in Beijing to discuss currency, intellectual property protection and other trade issues. They were accompanied by Sen. Tom Coburn.

The visit comes ahead of a March 31 deadline for a Senate vote on a bill proposed by Schumer and Graham to impose punitive tariffs of 27.5 percent on Chinese goods to counter what they say is manipulation of the value of China's currency, the yuan.

Graham said he would to press Chinese officials to raise the value of the yuan, which Washington and other trading partners say is too low and gives unfairly helps Chinese exporters at the expense of foreign other competitors.

"There is a lot of concern back home about the lack of free market floating of the currency," said Graham.

"There has been some adjustment in the currency in the last week or so that has been encouraging, but from my point of view, I would like to discuss with the Chinese, 'Why the movement now, not before? And what are we reasonably to expect in the future?"' he said.

"We've been stymied and worried that we haven't seen much progress thus far," Schumer said. "The last week has been encouraging. We want to know if that will continue."

The trio met Tuesday with Foreign Minister Li Zhaoxing.

Li emphasized that China and the United States "have cooperated well and yielded positive outcomes," said Qin Gang, a Foreign Ministry spokesman.

"We should have consultation and properly resolve those issues and not politicize or magnify them," Li said, according to Qin. There were no indications of any Chinese offers of concessions or other initiatives.

Last year, Chinese exports to the United States overwhelmed imports from the U.S. by US$202 billion (euro168 billion), and leaders in Congress blame an undervalued yuan.

Also Tuesday, an American trade official urged China to remove market barries to U.S. companies to head off possible punitive measures such as those proposed by Graham and Schumer.

"My concern is that the deficit ... could lead ultimately to policies in the United States that would be very unhelpful, in fact that would be damaging with regards to the China trade relationship," Deputy U.S. Trade Representative Karan K. Bhatia said in Shanghai.

China allows the yuan to trade within a narrow band that is linked to a group of currencies. The government dropped its direct link to the U.S. dollar last July and raised its officially set exchange rate by about 2 percent.

It has risen by nearly 1 percent since then, but Washington and other trading partners want to see a much larger increase.

Last week, China 's currency gained at a slightly faster pace seen by analysts as a diplomatic gesture ahead of the senators' visit and a trip to Washington next month by Chinese President Hu Jintao.

"They ought to understand China is making the greatest effort," Wu Xiaoling, deputy governor of China's central bank, said Saturday when asked about the senators' visit.

However, China insists that Beijing 's foreign exchange policy is set with domestic needs in mind, reports the AP.

D.M.