Information gathered by a high-level delegation that is headed to China next week will be used in preparing a report to Congress on whether China is manipulating its currency to gain unfair trade advantages, the Bush administration said Friday.
Treasury Under Secretary Tim Adams (search) spoke to reporters in advance of a trip to China by Treasury Secretary John Snow and Federal Reserve Chairman Alan Greenspan, who are leading a delegation to a meeting of a joint U.S.-China panel created to deal with economic tensions between the two countries.
"What we hear and what we learn will help the shaping of this report," Adams said.
Many members of Congress are pushing the administration to brand China a currency manipulator, a designation that would trigger talks between the two countries and ultimately could lead to the United States imposing economic sanctions on China if it decided to take the issue to the World Trade Organization and won an unfair trade case.
China announced in July that it was breaking its decade-old tight link between the Chinese yuan and the U.S. dollar, a link that American manufacturers have said resulted in undervaluing the dollar by as much 40 percent, giving China a huge competitive advantage.
China also allowed the yuan to rise in value against the dollar by 2.1 percent, but American manufacturers and members of Congress contend that it far too small a move to do anything to correct America's huge and growing trade deficit with China.
Snow told a congressional committee on Thursday that the Oct. 16-17 meetings of the Joint Economic Commission would be an opportunity to press China to move more quickly to make its currency more flexible, which would allow it to rise in value against the dollar.
In an effort to show U.S. unhappiness with the current pace of events, Sens. Evan Bayh (search), D-Ind., Charles Schumer, D-N.Y., and Debbie Stabenow, D-Mich., on Friday introduced a Senate resolution calling on the administration to request that the International Monetary Fund file a formal complaint charging China with manipulating its currency to gain trade advantages.
Bayh said the resolution was prompted by recent statements from IMF Managing Director Rodrigo Rato that there was no evidence China was manipulating its currency.
"The IMF, by its own rules should be investigating this problem, and my resolution will help make that happen," Bayh said.
Adams said the currency issue was one of three areas where the administration wants to see greater efforts by the Chinese to address the huge trade gap with the United States. Adams said the Chinese should do more to stimulate domestic demand and rely less on exports to provide economic growth.
He said the country's financial system should open up more so that foreign banks can operate more freely in the country, a move he said would make the economy more open and allow it to function better.
The administration has said that it will submit the currency report in early November, missing a congressionally mandated Oct. 15 deadline, in part because it wants to include information learned during the upcoming meetings and stops that Snow will make while in China next week at the Shanghai stock exchange and in Chengdu, one of China's leading industrial areas.
In addition to the JEC meetings, Snow and Greenspan will participate from Oct. 14 to midday on Oct. 16 in meetings of finance ministers and central bank presidents from the Group of 20 nations, which includes the world's seven wealthiest countries and major emerging economies such as China, Brazil and India.
Adams said the G-20 talks would focus on what can be done about soaring global energy prices and also proposals to reform the IMF and the other international lending agencies.