WASHINGTON – The Bush administration issued a fresh call Thursday for the International Monetary Fund to do a better job of policing foreign exchange practices around the globe and to crack down on countries that manipulate their currencies.
"Increasingly what is missing is a thorough assessment of exchange rate issues," Tim Adams, the Treasury Department's under secretary for international affairs, said in remarks to the American Enterprise Institute.
Although Adams didn't specifically mention China, the remarks came amid prodding by the administration to get Beijing to take further steps to overhaul its currency system.
U.S. manufacturers contend that China's currency practice has artificially undervalued the yuan, hurting sales of U.S. exports and costing U.S. factory jobs.
The United States in 2004 ran up a $162 billion trade deficit with China — the largest ever with a single country. Trade figures for 2005 will be reported next week by the government. Analysts predict that America's deficit with China last year topped $200 billion.
Under pressure from the United States, other major economic powers and the IMF, China announced in late July that it would no longer link its currency directly to the U.S. dollar. Instead, China said it would let its currency rise slightly against the dollar.
Although the administration declined in November to brand China a currency manipulator, it made clear it wants Beijing to make progress toward a flexible currency system. Rodrigo Rato, chief of the 184-nation IMF, also has said he wants to see the Chinese move ahead on this front.
Rato has said the IMF hopes to improve economic evaluations — including oversight of exchange-rate policies — that are usually conducted each year on member countries.
Adams suggested a number of ways the IMF could strengthen its oversight of member countries' currency practices.
"The IMF may fear being perceived as doing the bidding of the United States," Adams said. "But the ideas I proposed today go beyond immediate U.S. policy concerns. ... I believe a strong IMF role on exchange-rate issues is central to the stability and health of the international economy."