[Mb-civic] CBC News - U.S. WARNS CHINA ON CURRENCY

Tue May 17 17:13:39 PDT 2005

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U.S. WARNS CHINA ON CURRENCY 
WebPosted Tue May 17 14:59:00 2005

Washington---The U.S. government warned China Tuesday to stop linking its
currency to the U.S. dollar or it could face economic sanctions.

The Bush administration has urged Beijing for years to stop linking the
yuan to the greenback. The White House says that linkage has increasingly
hurt U.S. manufacturers by putting them at a huge disadvantage.

In its semi-annual report to Congress, the U.S. Treasury Department
stopped just short of accusing China of engaging in an unfair currency
practice. But it said China could face such a finding in its next report,
six months from now.

"If current trends continue without substantial alteration, China's
policies will likely meet the statute's technical requirements for
designation" of currency manipulation, the Treasury report said.

The U.S. examines the exchange rate policies of all of its trading
partners to determine if they are trying to manipulate the exchange rate
to get an unfair advantage. Violators can face sanctions.

China has pegged the yuan to the greenback for more than 10 years. U.S.
manufacturers say if the yuan had been allowed to float, it would be
worth as much as 65 per cent more.

China's refusal to increase the value of its currency over the last
decade led to China running a record $162 billion US trade surplus with
the U.S. in 2004, as Chinese imports became cheaper in the U.S. and U.S.
exports to China became more expensive.