Senator wants China revaluation by end-2006
WASHINGTON (Reuters) – The co-author of a U.S. Senate bill
that would punish China if it doesn’t revalue its currency said
on Wednesday that a 7-10 percent rise in the Chinese yuan by
year’s end would show Beijing was serious about reform.
“My hope is that between now and the end of the year you
will have a revaluation somewhere in the double-digit area,”
said South Carolina Republican Sen. Lindsey Graham.
Graham and New York Democrat Sen. Charles Schumer in March
decided to delay until September 29 a vote on their bill, which
threatens to impose a 27.5 percent tariff on China’s exports to
the United States if it does not revalue the yuan further.
Graham, Schumer and other critics complain China has
deliberately undervalued the yuan by 15 percent to 40 percent
to give Chinese exports an advantage in international trade.
The Bush administration also has been pressing China to
allow the yuanto trade more freely.
Beijing responded somewhat last July when it announced it
was dropping a peg between the yuan the dollar, revaluing the
yuan by 2.1 percent, and adopting a managed float against a
basket of currencies. Since then the currency has risen just
Graham said the “jury is still out” on whether China’s move
last year was a step toward real reform or merely cosmetic.
“If we see further revaluation that shows me that by the
end of this calendar year we could have a net revaluation of
seven to 10 percent, I would say that China is taking a
different path,” he said when asked how the Graham-Schumer bill
would be handled in September.
Graham said in a speech to the Heritage Foundation think
tank in Washington that his visit to China in March made him
“much more sympathetic to the problems that the Chinese face
than before I went.”
“Their banking system is in complete shambles and they
can’t float their currency overnight,” he said.
The U.S. Treasury Department will release its report on the
foreign exchange regimes of global trading partners next week
and lawmakers, businesses and markets will be watching the to
see whether the United States will single out China for
manipulating its yuan currency.