By Andrew Stiles - 06/10/10 11:13 PM EDT
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.
“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
“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
“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.
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
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
“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.