Snow: China can move faster on currency
(Reuters)
Updated: 2005-11-05 08:51

US Treasury Secretary John Snow on Friday said China was in a position where it could move more swiftly toward greater currency flexibility.

"I think that China remains committed to greater flexibility in their currency and opening of their financial markets," Snow said in an interview with CNBC. "It's an irreversible course and we think they're now in a position to move even faster."

"We're urging them to move faster" toward greater currency flexibility, Snow added. "I think they know it's in their own interest to continue on this path and even accelerate it."

U.S. manufacturers and many lawmakers have long complained an undervalued yuan currency was giving China an unfair trade advantage in global markets.

In July, China dropped a long-standing policy of pegging the yuan to the dollar, revalued it by 2.1 percent, and adopted a managed float with reference to a basket of currencies. Since that move, however, the yuan has appreciated only a further 0.3 percent, disappointing U.S. lawmakers.

In an interview with Bloomberg Television, Snow said there was a good deal of momentum on legislation in Congress that would slap hefty tariffs on Chinese exports to the United States, but that was not the right approach.

"There is strong feeling running in the Congress that China needs to move on the trade issues, on intellectual property rights, on counterfeiting, and on the currency, and that legislation certainly has some momentum to it," he said.

But he added: "I don't think it's particularly good legislation, I think it points the wrong way."

Snow and Federal Reserve Chairman Alan Greenspan on Wednesday met with the two lawmakers who have sponsored the legislation -- Democratic Sen. Charles Schumer of New York and Republican Sen. Lindsey Graham of South Carolina.

Schumer and Graham unexpectedly won a procedural vote on the bill early this year by a tally of 67-33, but they agreed to pull it from consideration after a late-June meeting with Snow and Greenspan convinced them China was about to act.

It is not clear if the latest meeting would similarly lead them to hold off pressing for a vote. "We'll see," Schumer told Reuters on Thursday. "We'll see if there's progress."

President George W. Bush is scheduled to travel to China in the middle of the month.

In the CNBC interview, Snow reiterated the U.S. policy line on currencies, saying foreign-exchange rates are best set in open, competitive financial markets.

Asked about a report released earlier on Friday that showed U.S. employers added only 56,000 workers to their payrolls last month, Snow told CNBC it was "pretty good" in light of high energy prices and the damage wrought by recent hurricanes.

"I think this is pretty good performance under the circumstances and I think ... it shows the American economy is capable of taking a blow and bouncing back and that the fundamentals are strong."