US Treasury Secretary Henry Paulson said on Wednesday that he told two
legislators that threatening tariffs is "not the right way to negotiate with
China."
Paulson met Senators Charles Schumer and Lindsey Graham a day earlier to
persuade them to delay a vote on a bill to impose tariffs on Chinese imports if
Beijing did not raise the value of its currency.
The senators said they needed time to consider Paulson's arguments before
deciding whether to call a vote this week.
"I'm doing my best job to make the case to Chuck Schumer and Lindsey Graham
that their bill wouldn't help anything, and that's not the right way to
negotiate with China," Paulson said in a speech to the National Association of
Manufacturers in Washington. "I've asked them to give us more time."
Schumer, a New York Democrat, and Graham, a South Carolina Republican, are
among legislators who say that China artificially depresses the value of its
currency, the renminbi, to makes its products cheaper on world markets. They
argue that the policy is costing US manufacturers sales and jobs.
After meeting Paulson, Schumer and Graham said they needed "a few days" to
decide whether to push ahead with a vote this week on the bill, which calls for
a 27.5 per cent duty on all Chinese imports.
Both acknowledged it's unlikely to become law because the House of
Representatives is not considering similar legislation. The Bush administration
is opposed to the bill as are most business groups.
Zhou Xiaochuan, governor of People's Bank of China, said last week that China
plans to end exchange controls on the renminbi 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 renminbi in a stable
manner," he said in Singapore on the sidelines of annual meeting of the
International Monetary Fund and the World Bank.
The remarks were interpreted by some in the market as a sign that the
government would soon make moves on the currency issue.
Paulson, in a speech to several hundred manufacturing officials, is reported
to have said: "One of the issues we always have when we talk about success with
China - we have the same objectives, we have the same principles, but the
question is speed."
Paulson and Vice-Premier Wu Yi agreed on September 20 in Beijing to meet
twice a year for talks on economic relations, the first such arrangement between
the two countries. Paulson said he hoped the US could use the new dialogue to
convince China to allow its currency to appreciate and open its capital markets.
The first meeting under the agreement, called the China-US Economic Dialogue,
will occur this year in China. The following meeting, to take place next spring,
will be held in the US, Paulson said. Talks will focus on "long-term" issues,
such as helping China create innovative companies and protecting the
environment.
"All that we are accomplishing here is putting a process in place where we
night be more successful than we might otherwise have been," he told the group.
"Time will tell how successful we'll be."
