International Diplomacy Rather Than U.S. Pressure Will Work To Get China To Strengthen Yuan; Timothy Geithner

According to a report by Bloomberg, amid increasing pressure from the congress, which is demanding to brand China as a "currency manipulator", U.S. Treasury Secretary Timothy F. Geithner believes that international diplomacy, rather than U.S. intervention and its pressure on China, will work better in solving the issue of Undervalued Chinese Yuan. This was made clear by Geithner in his April 3rd statement, when he announced the delay in the submission of the report on global currencies policies scheduled originally on April 15th.

During the announcement, he once again requested that China adopt flexible currency instead of pegging it (Yuan) against the US Dollar. Geithner reckons that a series of meetings lined up between him and his Chinese counterparts over the next three months will be very “critical” to bring about the policy changes from China that may lead to a “more balanced”, and sustainable global economy. He expressed faith that China will take its own measures over the next several months to strengthen its currency.

In an interview with Bloomberg television on April 2, Geithner said that the US strategy is “designed to increase the odds that China does decide to do what’s in their interest, which is to let their currency start to move up again, and that’ll be part of making sure we have a more healthy global recovery in place.” However, the US lawmakers from both the parties are disappointed as they believe that such negotiations will not bring any policy change from China. In an emailed statement two days ago, Senator Charles E. Schumer, wrote, “We are disappointed, but not surprised by the administration’s decision, after five years of stonewalling, punctuated by occasional, but halting action by the Chinese, we have lost faith in bilateral negotiations on this issue.”

Last month, Senator Schumer along with four other senators introduced legislation that required the treasury to resolve whether a nation has artificially kept its exchange rate lower with the dollar and then impose heavy import duties on goods from such nation. Meanwhile, Alan Tonelson, research fellow with the U.S. Business and industry council, a Washington based organization representing about 2000 manufacturing companies, has also shown his dismay over delay of submission of report. The Treasury’s delay “underscores the urgent need” for Congress to pass such legislation, said Alan Tonelson. He further added in an interview that, “There can be no question that attempts to negotiate an end to China’s currency manipulation have failed for eight years and it is long past time for unilateral U.S. response.”