US Senators Withdraw China Tariff Bill

by Mike Godfrey, Tax-News.com, Washington

06 July 2005

Treasury Secretary John Snow and Federal Reserve Board Chairman Alan Greenspan convinced US Senators Charles Schumer and Lindsey Graham to back-track on their bill. Senator Schumer said the top officials had given an undertaking to him and Graham, a Republican, that China should shortly "be on the path to revaluing its currency".

A spokesman for the People's Bank of China denied it, saying: "With regard to the yuan's revaluation, we never make predictions and there is no timetable."

China has been widely criticized by its trade partners for maintaining the yuan at 8.28 yuan to the dollar. Beijing has promised to follow a more flexible currency policy, but set no timetable for change.

"Their view that this is for real is very meaningful to us," Senator Schumer said. "What we have been told is that there are major forces in Chinese society in the government and in the economy that realise that their policy on the currency doesn't work for China, doesn't work for the United States, and doesn't work for the world."

It is widely supposed that Beijing has completed preparations for linking the yuan to a basket of currencies rather than just the dollar.

The Treasury Secretary said: "It is important that China move to a more flexible exchange rate regime. We have urged them to do so, and they have agreed that it is in their interest to adopt greater exchange rate flexibility."

Recommended