China Responds To Currency Reform Deadline
The United States Treasury said that it would give China six months to make its currency more flexible, or it would name the country a “manipulative trading partner” in its report to congress.
China rejected this demand saying that U.S. and European curbs on its textile imports are not fair. China basically told the U.S. to worry about itself before sticking its nose in China’s business.
Congress is becoming impatient with the way China is handling its currency, and with the U.S. Treasury for the way it has been handling the situation with China.
China has earned praise from the U.S. Treasury as it has taken steps to improve its financial system allowing for more flexibility in the country’s currency. Now the Treasury wants China to put its money where its mouth is so to speak. CNN reports:
“We agree with many of you that a more flexible regime would be better for China’s economy. But there is no timeframe for such a change as conditions are not ready yet,” Reuters quoted Wei Benhua, deputy chief of China’s foreign exchange regulator, as telling a trade conference in Singapore.
Wei said accusations that China was deliberately holding down the yuan were groundless and told the United States to “put its own house in order before blaming others” for its trade deficit.
“It is now widely accepted that China is now ready and should move without delay in a manner and magnitude that is sufficiently reflective of underlying market conditions,” said the Treasury.
The Treasury will be keeping a close watch on China’s currency practices until the six-month deadline comes, but Chinese leaders who say the country is working toward a more flexible currency say that a deadline cannot be placed on it.