Tags: China Pushes Back as Senators Threaten Yuan Bill

China Pushes Back as Senators Threaten Yuan Bill

Tuesday, 18 Jan 2011 02:33 PM

Chinese President Hu Jintao flew to the United States on Tuesday for a state visit punctuated in advance by threats from U.S. senators to punish Beijing over its currency policies.

The White House weighed in on the currency dispute hours before Hu was due to arrive, urging China to take more steps to allow its yuan currency to strengthen.

"We believe that more must be done. That is an opinion that is held, not just by this country, but by many countries around the world," White House spokesman Robert Gibbs said.

Hu said earlier this week he would not accept U.S. arguments that the yuan was undervalued — an opening volley in a disagreement that is expected to dominate this week's trip.

Analysts are calling the visit the most important by a Chinese leader in 30 years given China's growing military and diplomatic influence and its emergence as the world's second-largest economy after the United States.

Tensions over trade will factor prominently in Wednesday's summit between Hu and President Barack Obama. A host of other thorny issues, from rebalancing the global economy to dealing with North Korea, will round out the agenda.

Energy is also on the list and both countries sought to use that issue as a positive start to the week, including cooperation in the clean energy field.

General Electric Co. reached a deal with China Huadian Corp. to supply about 50 gas turbines and generate some $500 million in revenue over the next five years.

Pressed on whether there would be announcements of commercial deals to coincide with Hu's visit, Gibbs replied: "I have not been told of any big deals that will be rolled out tomorrow. I'm certainly all ears if anything happens."

CURRENCY ON CENTER STAGE

Currency concerns took center stage in Washington.

Senators Sherrod Brown, a Democrat, and Olympia Snowe, a Republican, sent a letter to Treasury Secretary Timothy Geithner promising to introduce legislation to "address China's unlawful practice of currency manipulation."

"China's actions to subsidize its exports through currency manipulation pose both immediate and long-term challenges to American manufacturers and workers still recovering from the economic recession," they wrote.

Their letter came after a group of senators said on Monday the United States had to pass legislation to punish China if it fails to allow its currency to rise in value.

Chinese Foreign Ministry spokesman Hong Lei said Beijing hoped U.S. lawmakers would not sour the tone ahead of Hu's arrival, repeating that China was committed to reforming its exchange rate system.

"A great many factors have proven that the renminbi's (yuan's) exchange rate policy is not the main cause of the China-U.S. trade imbalance," Hong said. "We hope relevant U.S. lawmakers ... avoid harming the overall interests of China-U.S. economic and trade cooperation."

Investors and markets will watch for signs that Hu and Obama can ease tensions after a rocky 2010 but many analysts have cautioned not to expect too much beyond friendly words and business deals worth potentially tens of billions of dollars.

Tensions over currency were a big factor in relations last year. The yuan has risen nearly 3.5 percent against the dollar since Beijing ended its peg to the dollar in June, much less than demanded by critics in the United States.

Hu, in a written interview with The Washington Post and The Wall Street Journal, said China had taken steps toward a more flexible exchange rate policy.

China also says the United States should do more to rebalance the trade relationship. Chinese statistics showed a surplus in China's favor of $181 billion in 2010.

© 2017 Thomson/Reuters. All rights reserved.

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Chinese President Hu Jintao flew to the United States on Tuesday for a state visit punctuated in advance by threats from U.S. senators to punish Beijing over its currency policies. The White House weighed in on the currency dispute hours before Hu was due to arrive, urging...
China Pushes Back as Senators Threaten Yuan Bill
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