US warns China on revaluation
In its semi-annual report to Congress on exchange rates and trade, the US Treasury warned China that it expects China to revalue its currency within six months.
Treasury Secretary John Snow emphasized that the US was not demanding full revaluation immediately, but that it does expect appropriate intermediate steps that will support full revaluation when it takes place.
A senior Treasury official later more fully defined what such an intermediate step would be, saying that a 5 percent revaluation would not be sufficient.
The report stopped short of accusing China of engaging in currency manipulation, but it signaled a harder line than the US has pursued in the past.
In the view of some US legislators, however, the report did not go far enough because it does not define any repercussions if China does not meet the six-month deadline.
Democratic Senator Charles Schumer has introduced a bill that, if approved, would impose serious sanctions on China if revaluation does not occur in six months.
This legislation worried officials because experts on China have said that threats will only delay China’s move to revalue its currency.
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