US treasury pressures China on renminibi

Story link: US treasury pressures China on renminibi

The US Treasury has put China on notice that it expects Chinese currency to be revalued within six months.

The challenge came in the Treasury Departments semi-annual report to Congress on exchange rates and trade. According to some US legislators, however, the report does not go nearly far enough because it does not threaten any action if revaluation does not take place in the allotted time.

A bill has been introduced in the Senate by Senator Charles Schumer that would impose heavy sanctions on China if revaluation has not come in six months. Some officials worried that the legislation would not help but would in fact worsen matters in light of the fact that experts on China have warned that threats could actually delay China’s move to revalue its currency.

In the report, Treasury Secretary John Snow emphasized that the US did not expect full revaluation to take place immediately, only that it expects appropriate intermediate steps that would aid full revaluation when it comes to be taken very soon. After the report was released, a senior Treasury official put some value on what sort of steps would be seen as appropriate, saying that a 5 percent revaluation would not be considered enough of a step in the right direction.