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Snow says China moving to flexible yuan
(Reuters)
Updated: 2005-10-17 19:49
U.S. Treasury Secretary John Snow said on Monday that he
was convinced China was committed to letting market forces drive the yuan's
value but warned Beijing had to show progress to hold off U.S. protectionist
sentiment.
U.S. Treasury Secretary John Snow (L) arrives
for a meeting in the National Development and Reform Commission
headquarters in Beijing, China October 14, 2005.
[Reuters] | Speaking at a news conference after meeting Chinese Finance Minister Jin
Renqing and Zhou Xiaochuan, governor of the People's Bank of China, Snow said
both had given assurances of Beijing's will to further liberalize the country's
financial markets and continue progress toward a more flexible yuan.
China revalued the yuan by 2.1 percent in July and abandoned a peg against
the dollar in favor of a managed float.
But since then, authorities have allowed the yuan to rise by less than 0.3
percent and U.S. law-makers are once again growing unhappy at what they call a
seriously undervalued yuan.
Asked why he was confident that China would indeed let the currency range
more freely, Snow said: "Governor Zhou and Minister Jin reaffirmed this
fundamental commitment and reviewed with me a number of initiatives under way in
financial markets, particularly with respect to the trading platform ... that
are preparing the way for greater currency flexibility."
In a week-long visit to China, Snow has been trying simultaneously to show
Congress that Treasury is pushing toughly for currency reform and to encourage
wary Chinese officials to press on with changes that U.S. officials say will
boost China's domestic demand and cut America's trade deficit.
Snow was participating in meetings of the U.S.-China Joint Economic
Commission, where the United States is trying to get Beijing to adopt futures
and options and other market mechanisms needed to support a floating currency.
"Moving to a truly flexible exchange rate requires a lot of preparatory
steps. China is seriously engaged in taking these preparatory steps," Snow said.
"These are the things that give me encouragement."
The U.S. Treasury is due to report next month whether it judges China to be
manipulating its currency. If it does, that could result in punitive trade
measures against Beijing.
Some U.S. lawmakers are separately proposing to slap
tariffs of as much as 27.5 percent on China unless it unshackles the yuan.
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