Center

US senators' proposal condemned

By Han Xiao (China Daily)
Updated: 2006-09-27 08:59

China ended the yuan's peg to the US dollar in July 2005, and the value of the yuan against the dollar has risen 2.41 per cent since then, but this has failed to quell calls in some circles for a further appreciation.

Central bank Governor Zhou Xiaochuan said last Thursday that China plans to end exchange controls on the yuan and open its financial markets, but gave no timetable.
"We will continue our efforts to develop our financial market and widen it gradually, but will push for the free convertibility of the yuan in a stable manner."

Schumer and Graham first offered their bill as an amendment to other legislation in April 2004, but stepped back after appeals from the Bush administration, which fears the bill could ignite a trade war.

The senators claim China's currency is undervalued by 15 to 40 per cent, giving China a competitive edge in exports and resulting in a growing trade surplus with the United States.

China's trade surplus widened to US$18.8 billion in August from US$14.6 billion in July, according to the latest statistics from the customs bureau.

Last month, Schumer and Graham told reporters they would demand a vote before Saturday unless China takes more steps toward revaluing soon.

US Treasury Secretary Henry Paulson also urged the two senators to drop the bill during his recent visit to Beijing.

Paulson's mission now is to convince the senators they should give the newly announced US-China economic dialogue time to work.