Treasury Gives China Six Months To Please Congress
The United States Treasury has given China six months to make its currency more flexible, or it will name the country as a “manipulative trading partner” in its report to congress.
“The fixed exchange rate that China now maintains is a substantial distortion to world markets, blocking the price mechanism and impeding the adjustment of international imbalances,” says the report.
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. MarketWatch says that:
American manufacturers complain that the fixed Chinese exchange rate provides unfair cost advantage to China’s exports and is costing thousands of U.S. jobs.
Their concerns have found sympathetic ears in Congress, where efforts are under way to slap a tariff on Chinese imports if no change in the fixed exchange rate is made.
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.
“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. Congress will be ready to take action itself if China doesn’t comply.