http://www.nytimes.com/2006/03/29/business/worldbusiness/29trade.html

WASHINGTON, March 28 ¡ª Two of China's most relentless critics in Congress announced a temporary cease-fire on Tuesday in their long-running attack on China's foreign-exchange practices.

In an about-face, Senator Charles E. Schumer, Democrat of New York, and Senator Lindsey Graham, Republican of South Carolina, dropped plans for a bill that would threaten steep tariffs on Chinese imports if Chinese leaders refuse to let their currency, the yuan, rise in value against the dollar.

Both lawmakers said they had become more optimistic as a result of their weeklong trip to China, where Chinese leaders emphasized their willingness to let their currency float more freely and to address other aspects of their nation's growing trade deficit with the United States.

"We learned that the Chinese have come to a conclusion that a fixed currency is no good for China," Mr. Schumer said Tuesday. "We believe that the progress we have seen in the last two or three weeks will continue."

Mr. Schumer and Mr. Graham said they would not demand a Senate vote on their bill, which would threaten China with a 27.5 percent tariff on all exports to the United States if it did not let its currency move in line with market forces.

Though they said that they reserved the right to push for a vote by the end of September, the two senators made it clear they hoped to let the matter drop.

China has kept its currency at an almost fixed exchange rate against the dollar for more than a decade, and American manufacturers have long complained that the yuan's low valuation has given Chinese imports an extra competitive edge.

Political anxiety about China's huge trade surplus and its competitive pressure on American producers has risen in many quarters of Congress. The Bush administration, though a staunch defender of trade with China, has bluntly criticized Chinese leaders for failing to address a long list of trade complaints and has hinted it might accuse China of engaging in "currency manipulation."

Mr. Schumer and Mr. Graham have been threatening to force a Senate vote on their bill for nearly two years, but they have repeatedly held back after receiving assurances that China was moving toward a more flexible exchange-rate policy.

Last July, China announced a 2.1 increase in the value of the yuan and said it was moving away from a fixed exchange rate. But the yuan barely budged again until earlier this month, when the government allowed it to edge up another 1 percent.

As a practical matter, American companies are ambivalent about the entire issue.

The National Association of Manufacturers has complained about China's exchange rates for years, but it has opposed the Schumer-Graham bill out of fear that it would imperil a trade relationship that is vital to many American companies.

The group estimates that about a quarter of all manufactured goods from China come from subsidiaries of American companies. But that estimate does not include large volumes of imports from Chinese companies working as subcontractors to American manufacturers.

Senator Charles Grassley of Iowa and Senator Max Baucus of Montana, respectively the top Republican and Democrat on the Senate Finance Committee, are pushing a separate bill that would focus more attention on currency policies but stop short of threatening tariffs on imported goods.