WASHINGTON — The Obama administration announced Friday it will delay a scheduled report on whether China is manipulating its currency to gain trade advantages until after upcoming meetings with world leaders next month.
Instead of putting out a report, the Treasury Department issued a statement praising China for letting the yuan appreciate by roughly 3 percent since June 19. The administration also announced an investigation into unrelated trade policies that union leaders complain have allowed Chinese businesses to gain advantages in the clean energy market.
The dual effort suggests careful diplomacy. It gives China more time to show it’s serious about responding to critics who say it has undervalued its currency to gain a step up in a weak global economy. And it allows President Barack Obama to show U.S. manufacturers, labor unions and lawmakers that he is getting tough with China ahead of the Nov. 2 midterm elections – without labeling Beijing a currency manipulator.
Chinese Vice Premier Wang Qishan spoke by phone with Geithner on Friday “to exchange opinions on issues concerning China-U. S economic relations,” the state-run Xinhua News Agency said late Friday in a one-sentence report with no details of their conversation.
There was no immediate official response from China to the delay of the currency report.
The yuan has been rising by about 1 percent per month since the start of September, a pace that the Treasury statement endorsed.
“If sustained over time, this would help correct what the IMF has concluded is a significantly undervalued currency,” Treasury’s statement said.
U.S. manufacturers believe China’s currency is undervalued by as much as 40 percent, making U.S. goods more expensive in China and Chinese goods cheaper and thus more competitive in the U.S. market.
Frank Vargo, vice president for international affairs at the National Association of Manufacturers, said his group would like to see a much more rapid appreciation of China’s currency than 1 percent per month. He said one of the dangers is that after the upcoming meetings, China could revert to little or no further currency appreciation.