Senators pressure Geithner over China

Despite bipartisan Senate pressure, Treasury Secretary Timothy Geithner wavered Thursday on when his department will issue a report on China’s currency policies.

Democratic and Republican members of the Senate Finance Committee pressed Geithner to take a firm line with China by finding that the Asian giant manipulates its currency to secure a trade advantage.

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But the Treasury secretary, who postponed a report in April, refused to be pinned down on a timeframe.

 “It will be at that time when we decide is the right moment,” Geithner said at one point during the hearing in response to a question from Sen. John Cornyn (R-Texas.)

Senators repeatedly voiced frustration with the lack of progress with China. Lawmakers have long cried foul at China’s policy of pegging its currency to the U.S. dollar, which lowers the price of Chinese exports to the U.S. 

After Geithner said he delayed the report initially because he hoped to make “material progress” on the issue, Sen. Chuck Grassley (Iowa), the panel’s senior Republican, asked if he expected to see any.

“I honestly don’t know if we will see meaningful progress in the short term,” Geithner said. “China has made clear in public that they will resume reform on currency, but they haven’t said when or how they will act.

“It is ultimately China’s choice as a sovereign country,” he said.

Geithner suggested the U.S. would re-evaluate the issue after President Barack Obama attends the G-20 meeting of international leaders later this month in Toronto.

Chinese leaders will also be attending the meeting, which is expected to focus on the European debt crisis, which has complicated efforts to get China to unilaterally strengthen its currency.

Sen. Charles Schumer (D-N.Y.) warned Geithner he could expect legislation from Congress to address the issue.

“Be prepared,” Schumer said. “We’ll get the currency alignment corrected.”

Schumer on Wednesday said he’d seek to move legislation in the next two weeks that would allow the U.S. to consider currency manipulation in imposing anti-subsidy duties on imports from China and other countries.

“Why do we always shy away from telling the truth?” Schumer said of U.S. reluctance to label China a currency manipulator.

Geithner avoided directly answering a question from Schumer about whether Treasury believed his legislation would be effective.

Grassley had harsh words for China and Geithner, saying the time was long past for Treasury to admit what everyone knows to be true.

He said the administration should be able to discuss currency policy with China without China throwing a fit, and that it should not be so hesitant to take a hard line with China.

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“They need to grow and be citizens of this world, mature citizens,” Grassley said of the Chinese.

Geithner said the administration had taken aggressive steps to deal with “unfair trade policies” in China, and outlined three core objectives: creating a level playing field by addressing Chinese measures protecting “indigenous innovation” businesses in China; promoting balanced economic growth in both China and the United States; and pressuring China over its exchange rate policy.

“When American businesses are allowed to compete on fair terms they do exceptionally well,” Geithner said.

Geithner also highlighted China as a growing destination for U.S. exports, saying it was the third largest destination, up from 11th in 2000.

 Exports to China in the first quarter of 2010 rose by almost 50 percent compared to the previous year.

 Overall, the U.S. had a $19.3 billion trade deficit with China in April, up 14 percent from the previous month.

 Sen. Max Baucus (D-Mont.), chairman of the Finance panel, told Geithner he was unconvinced the administration was taking the necessary steps to address China’s unfair trade policies.

“Dialogue is important, but discussion does not equal action,” Baucus said.

Sen. Jim Bunning (R-Ky.) was even more forceful. He said refusing to release the report and deal with the currency issue was harming the U.S. economy.

 “Stop trading away American jobs,” Bunning told Geithner.

This story was originally posted at 1:41 p.m. and updated at 7:13 p.m.

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