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US senators urge China to further boost yuan

(AFP)
Updated: 2005-07-29 06:54

Two key U.S. lawmakers expressed disappointment over China's central bank announcement it has no immediate plans to further revalue the yuan and dismissed Beijing's gambit as a "baby step," AFP reported 

Democratic Senator Chuck Schumer and Republican Senator Lindsey Graham, vocal critics of China's monetary policy, said in a statement Thursday that additional adjustments are still needed.

"This was a good first step, albeit a baby step. The most significant thing about this move was that the Chinese have basically conceded that pegging their currency is bad for China, for the world economy, and for the US," Schumer said.

He added: "The Chinese have put in place a process that is designed to lead to further gradual revaluations based on market supply and demand. While the Chinese Central Bank has said that they will not do another fixed valuation in the near future, we trust that the Chinese will allow market forces to work."

Some lawmakers say the yuan remains grossly undervalued and that industry in the United States, Japan, and the European Union is being hurt by cheap Chinese exports.

Schumer and Graham are authors of a bi-partisan China Free Trade bill that would require China to stop pegging its highly devalued currency to the US dollar and let it float on the free market.

After a meeting in June with Treasury Secretary John Snow and Federal Reserve Bank chairman Alan Greenspan, Schumer and Graham agreed to delay a vote on their legislation calling for a 27.5 percent tariff on all Chinese goods. The vote now is scheduled for the end of the Senate session likely in October.

"We want to be very clear: our bill is still scheduled to be voted on before the end of the Senate session in October. If it seems like the Chinese are moving forward, great. If not, we are still ready to vote on our bill," Schumer said.