Yuan Appreciation Too Slow, Geithner Says

U.S. Treasury Secretary Tim Geithner said that the Chinese yuan is still undervalued

U.S. Treasury Secretary Tim Geithner said that the Chinese yuan is still undervalued and that the U.S. will continue to pressure China to let its currency climb faster.

“The pace of appreciation has been too slow and the extent of appreciation too limited,” Geithner said in his congressional testimony yesterday. “We have to figure out ways to change behavior.”

The secretary expressed disappointment over China's tight grip on the yuan during a pair of congressional hearings.

Geithner said the Obama administration will take a “careful look” on planned measures about trade sanctions that businesses can take in response to China's policy with the yuan, including a proposal by House representatives Tim Ryan and Tim Murphy.

“I'm not arguing for patience,” the secretary told the House Ways and Means Committee, claiming that Chinese officials have not followed through with their commitments.

“They agreed to abide by a set of rules and it is our job to hold them to those rules,” Geithner said.

The yuan has increased 0.8 percent in the past week, gaining a total of 1 percent since it was allowed to appreciate in June by China.

Geithner said that the recent appreciation of the yuan is too slow and not enough to prove that China is doing what it can with its announcement made in June 19 to let its currency have a more flexible exchange rate.

China's Foreign Ministry spokeswoman Jiang Yu responded by saying that revaluing the yuan is not the solution to the problem of the U.S. deficit and unemployment.

“The appreciation of the renminbi cannot solve the trade deficit with China,” Jiang said. “Pressure cannot solve the issue, rather it may lead to the contrary.”

Posted by James Fried on Friday September 17 2010, 1:09 PM EST. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0