BIZCHINA / American Reaction
Snow: Trade action against China won't work
(Reuters)
Updated: 2006-01-06 15:15
WASHINGTON - U.S. Treasury Secretary John Snow urged China on Thursday to
allow further revaluation of its currency, the yuan, saying it would help
world economies adjust from trade and current account imbalances, but
warned against retaliatory trade measures.
Treasury Secretary John Snow, pictured here in 2005, warned against trade
measures against China in a call-in TV program on January 5, 2006. [AFP]
"The trade deficit is influenced by lots of things, differential growth
rates, differential savings rates and investment rates and so on. But
clearly, getting the yuan more appropriately valued will be helpful to
the global adjustment process," he said on CSPAN television.
But Snow defended the administration's decision not to formally cite
China as a currency manipulator, saying U.S. pressure on Beijing has been
effective and that Chinese policy-makers recognize further revaluation is
in their national interest.
"They are putting in place mechanisms to allow their currency to have
greater flexibility... so I think we're on the right course," Snow said.
If the United States tried to pressure China to adopt a more flexible
currency through trade actions against Chinese imports, it might only
result in corresponding measures against the United States and create
market uneasiness, he warned.
U.S. manufacturers complain that, even after a modest revaluation of its
yuan currency last July, China's currency remains seriously undervalued
and that lets China unfairly run up steadily mounting surpluses on its
trade with the United States.
"China's behavior is inviting lots of negative reaction in the Congress,"
Snow said in response to questions after an address to the U.S. Chamber
of Commerce.
"They do need to clean up their act on intellectual property, they do
need to understand that trade is a two-way street," Snow said. "We're not
satisfied one bit on the currency issue, but it's awfully important we
resist these protectionist pressures."
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