Bloomberg News

Treasury Official Urges China to Accelerate Currency Reform

October 25, 2011

Oct. 25 (Bloomberg) -- The U.S. Treasury’s top international official said today that China still needs to accelerate reform for “more balanced growth and create fairer competition.”

Lael Brainard, Treasury’s undersecretary for international affairs, said China allowing its exchange rate to fully adjust is its “most powerful near-term tool” to combat inflation and shift demand toward domestic consumption. Yet, “strong interests within China” favor a “go-slow approach,” she said.

“Persistent misalignment holds back the rebalancing in demand needed to sustain the global recovery both in China and the world, and gives rise to substantial international concerns and ultimately to trade frictions,” Brainard said in prepared testimony before the House Ways and Means Committee. “Further, emerging markets that compete with China resist appreciation of their own currencies to maintain their competitiveness vis-a-vis China.”

The Senate approved a bill Oct. 12 that would let U.S. manufacturers seek duties on Chinese imports if they prove they were harmed by manipulation of the yuan. House of Representatives Speaker John Boehner, has voiced “grave concerns” that the measure may trigger a trade war, casting doubt on whether it will become law.

The legislation is also opposed by business groups such as the U.S. Chamber of Commerce.

--Editors: Gail DeGeorge, Kevin Costelloe

To contact the reporters on this story: Cheyenne Hopkins at Chopkins19@bloomberg.net;

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net


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