U.S. Buys China Time on Currency

A U.S. Treasury decision to delay making a determination on whether China is manipulating its currency could give Beijing some room to let the yuan rise in value. But some U.S. lawmakers and business groups are continuing to push for a tougher, and faster, approach.

Treasury Secretary Timothy Geithner said Saturday that the U.S. would delay a report to Congress on the currency policies of major trading partners, including China, citing a spate of high-level meetings between China and the U.S. The meetings, he said, “are the best avenue for advancing U.S. interests at this time.”

In a carefully worded and direct statement, Mr. Geithner said the Asian giant was relying on “currency intervention” and must move to a “more market-oriented exchange rate.”

A number of lawmakers have called on the Obama administration to label China a currency manipulator in that report, saying Beijing purposefully undervalues the Chinese yuan against the U.S. dollar to give its exports a competitive advantage.

The Treasury had been due to issue its semiannual report April 15. It declined to provide specifics on when it might issue its report, or what sort of benchmarks, if any, it might seek from China over the next few months to show Beijing is sincere about moving on the yuan.

China’s foreign and commerce ministries declined to comment Sunday on the delay, and its central bank officials couldn’t be reached.

The Treasury’s announcement represents a gesture to tone down the debate, giving the Chinese leadership political space to make a decision on the currency. Top Chinese officials haven’t ruled out letting the yuan rise, but have said they wouldn’t bow to outside pressure on the issue.

Behind the scenes, U.S. and Chinese officials have been in discussions about China’s currency, with China indicating it plans to move on the yuan, according to a senior government official. Administration officials determined it would be counterproductive to issue the currency report in the midst of these discussions.

China has kept the value of the yuan essentially unchanged against the dollar since mid-2008, after letting it rise about 21% against the dollar since 2005.

A stable yuan helped support the Chinese economy during the global financial crisis.

U.S.-China relations have become strained over other issues, such as U.S. arms sales to Taiwan. The two countries recently sought to ease tensions with a series of conciliatory comments and an announcement by Chinese President Hu Jintao that he would attend a nuclear-security summit this month in Washington.

The Treasury Department’s announcement didn’t sit well with some U.S. lawmakers and business groups who vowed to push ahead with legislative efforts to address the currency issue.

Sen. Charles Schumer (D., N.Y.) is co-sponsoring a bill with a bipartisan group of four other senators that would require the U.S. to impose tariffs and other penalties on countries that failed to address misaligned currencies.

“The administration may choose to delay its decision on whether to cite China, but we won’t delay our push for legislation,” he said in a statement.

A Democratic Senate aide previously said lawmakers would seek to attach the measure to must-pass legislation after the current congressional recess.