–Top Finance Panel Republican: U.S Must Put Public Pressure On China
–‘Everyone Knows’ China is ‘Manipulating’ Its Currency
–Admin Should File Article XV WTO Case Against China
–US’s Geithner:Move By China to More Flexible FX Helps Global Rebalance

By John Shaw

WASHINGTON (MNI) – Sen. Chuck Grassley, the ranking Republican on
the Senate Finance Committee, said Saturday that he is “disappointed”
that Treasury is delaying the release of its semi-annual international
trade and foreign exchange report.

The report is scheduled to be released April 15 but now won’t be.

Treasury Secretary Tim Geithner announced Saturday that the
report’s release will be delayed, citing a number of important
consultations that will occur between the U.S. and China in the coming
weeks. Geithner did not say when it will be released.

“Everyone knows that China is manipulating the value of its
currency to gain an unfair advantage in its international trade,”
Grassley said in a statement, a sentiment that could be assumed
to mirror that of many of his congressional colleagues.

“If we want the Chinese to take us seriously we need to be willing
to say so in public,” he said.

Grassley said that history shows that “denying the problem doesn’t
solve anything.”

Grassley has been a sharp critic of China’s currency and trade
practices over the years. He has long argued that the U.S. should
formally declare that China is “manipulating” its currency.

In his statement, Grassley renewed his suggestion that the Obama
administration file a WTO case against China, citing Article XV
violations.

Once Treasury issues its foreign exchange report, Geithner will
testify before the Senate Banking and Finance panels to describe its
findings and defend his decision. He will also testify before the House
Ways and Means Committee and probably the Financial Services Committee.

Earlier Saturday, Geithner issued a statement saying, “I have
decided to delay publication of the report to Congress on the
international economic and exchange rate policies of our major trading
partners due on April 15.”

Geithner said that in meetings with China officials over the next
few weeks the U.S. will attempt to make “material progress” on the
currency issue and added, China could contribute to resolving global
imbalances — high Asia savings and high U.S. consumption — by
introducing more FX flexibility.

“There are a series of very important high-level meetings over the
next three months that will be critical to bringing about policies that
will help create a stronger, more sustainable, and more balanced global
economy,” the statement said. “Those meetings include a G-20 Finance
Ministers and Central Bank Governors meeting in Washington later this
month, the Strategic and Economic Dialogue (S&ED) with China in May, and
the G-20 Finance Ministers and Leaders meetings in June. I believe these
meetings are the best avenue for advancing U.S. interests at this time.”

He said the U.S. is making progress adjusting its deficit, part of
its effort to rebalance the global economy. “As part of the overall
effort to rebalance global demand and sustain growth at a high level,
policy adjustments are needed that measurably strengthen domestic demand
in some countries and boost saving in others,” he said. “These are also
important to ensure robust job growth. In the United States, private
savings has increased, the current account deficit has fallen, and the
president has outlined a series of measures to reduce our fiscal
deficit.”

In China, the move toward more domestic consumption would be
appropriate. “Countries with large external surpluses and floating
exchange rates, such as Germany and Japan, face the challenge of
encouraging more robust growth of domestic demand.”

Thos “surplus economies with inflexible exchange rates” he said, ”
should contribute to high and sustained global growth and rebalancing by
combining policy efforts to strengthen domestic demand with greater
exchange rate flexibility,” something that is “especially true in
China.”

“Chinas continued maintenance of a currency peg has required
increasingly large volumes of currency intervention,” he went on.
“Additionally, China’s inflexible exchange rate has made it difficult
for other emerging market economies to let their currencies appreciate.
A move by China to a more market-oriented exchange rate will make an
essential contribution to global rebalancing.”

Geithner concluded, “Our objective is to use the opportunity
presented by the G-20 and S&ED meetings with China to make material
progress in the coming months.”

** Market News International Washington Bureau: (202) 371-2121 **

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