Posted on 05/18/2005 6:07:24 AM PDT by TigerLikesRooster
May 18, 2005
By EDMUND L. ANDREWS
WASHINGTON, May 17 - The Bush administration warned China on Tuesday that its currency policies were distorting world trade, and it brandished the threat of retaliation against the country's exports if Chinese leaders did not change course in the next year.
In language far harsher than it has used before, the Treasury Department declared that China's fixed exchange rate between its currency, the yuan, and the dollar posed a risk to its economy and the economies of much of the rest of the world.
The administration stopped short of accusing China of outright currency manipulation, a move demanded by American manufacturers who complain that the Chinese have artificially undervalued their currency to make exports cheaper in the United States.
But the new language marked a change in relations, which the administration has until now handled with painstaking delicacy.
"Current Chinese policies," the Treasury Department said in a report to Congress on Tuesday, "are highly distortionary and pose a risk to China's economy, its trading partners and global economic growth."
Coming closer than before to setting a deadline, the Treasury report warned that China's policy would meet its definition for currency manipulation unless Beijing officials make a "substantial alteration."
The administration's combative new stance was not enough to satisfy many members of Congress from both parties, who want to soon threaten China with steep tariffs on its exports if it fails to allow the yuan to rise significantly from a narrow band around 8.28 to the dollar.
(Excerpt) Read more at nytimes.com ...
Ping!
buy yuan
Why would they stop at warning China about its currency, when China is also engaging in limited warfare with India and also has threatened Taiwan? Also a consideration -- North Korea exists only because of China, and China has failed to pull its own weight in the nuclear disarmament of Kim Jung Il.
Add to the context the masses of contributions to the DNC in the 2000 election and the disappearing nuclear information, I think that there is real trouble with Beijing.
China is a leech.
It's a tight rope the Administration is walking. Putting pressure on what I think is the second single biggest purchaser of US Treasuries could back-fire on the Administration. I think a better policy would be to lessen our dependency of foreign creditors, take substantive steps to lessen our current fiscal deficits, and focus on reinvesting in our own manufacturing base.
As you may be suggesting, this is more than economic issue. It started as an economic problem, but now that China is pushed from all sides, including Democrats and Europeans, this leverage has become really valuable and it can be now used to take care of outstanding geopolitical problems you mentioned.
It cuts both ways. Actually it hurts Chinese regime more than America.
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