Snow: Punitive bills on China 'ill-conceived'
(Reuters)
Updated: 2005-10-17 16:13

CHINA ON THE MOVE

"Moving to a truly flexible exchange rate requires a lot of preparatory steps. China is seriously engaged in taking these preparatory steps," Snow said. "These are the things that give me encouragement."

The U.S. Treasury is due to report next month whether it judges China to be manipulating its currency, a finding that could result in punitive trade measures against it. Some law-makers are separately proposing to slap tariffs of as much as 27.5 percent on China unless it unshackles the yuan.

Snow called these legislative proposals "ill-conceived" and said he was hopeful of being able to point to progress China was making toward more-open markets.

"But it does have some support. We have to acknowledge that," he said.

"But we need to see movement," the U.S. Treasury chief added. "Let's make no mistake about it. Congress will demand to see movement."

Over the course of his Chinese visit, Snow and the delegation of senior officials accompanying him have sought to broaden the discussion of U.S.-Chinese economic relations beyond currency to include easier access for U.S. firms to Chinese banking, investment and other financial services industries.

Still, nearly every question at the press conference dealt with the U.S. effort to persuade China to adopt a more flexible currency.

Snow said the U.S. had no timetable for China to act but said the long-term goal was a freely floating Chinese currency. "The real objective is to see the Chinese currency eventually be fully flexible, eventually to move like the dollar and the euro and other fully floating currencies," he said.

Snow declined to say whether the encouraging signs he had heard from Chinese officials made it less likely that China would be named a currency manipulator in next month's report.

"I don't want to foreshadow what we will conclude," Snow said. "You know what we said last time and we're going to continue to look for signs of real progress."

In May, Treasury warned that China likely would be named a manipulator if it did not amend its currency regime. Beijing did drop its currency peg in July and modestly revalued the yuan, but the United States wants to keep the pressure on for more action.

"We will continue to look hard at the situation and try and evaluate whether or not sufficient progress is being made," Snow said.