US politicians demand action on yuan

A bipartisan group of 130 US lawmakers on Monday urged top Obama administration officials to take immediate action to address China's "currency manipulation."

"The impact of China's currency manipulation on the US economy cannot be overstated. Maintaining its currency at a devalued exchange rate provides a subsidy to Chinese companies and unfairly disadvantages foreign competitors," the lawmakers said in a letter to US Secretary Timothy Geithner and Commerce Secretary Gary Locke.

A weak currency makes the price of a country's goods relatively more attractive, boosting demand for its exports at the expense of other countries.

Chinese Premier Wen Jiabao on Sunday brushed off US complaints about China's exchange rate, calling them counterproductive.

He also blamed Washington for a deterioration in US-China ties because of US weapon sales to Taiwan and President Barack Obama's meeting with Tibet's spiritual leader, the Dalai Lama.

But the lawmakers letter showed the pressure Obama faces to push China to revalue its currency, which many US lawmakers believe is to blame for lost manufacturing jobs and the huge US trade deficit with China.

"If the administration fails to act on this issue it will hold back our economic recovery and hurt the ability of American small businesses and manufacturers to increase their production, keep their doors open, and create jobs," said Representative Michael Michaud, a Maine Democrat.

The lawmakers urged the Commerce Department to make a major policy change and agree to impose "countervailing duties" on a case-by-case basis against countries that manipulate their currency for an unfair trade advantage.

The department is already considering that possibility in a case involving coated paper imports from China.

The lawmakers also demanded the Treasury Department formally label China as currency manipulator in an April 15 report on the currency practices of major trading partners.

President Barack Obama's administration has declined to take that step in two previous reports, although Obama accused China of currency manipulation in his 2008 presidential bid.

- Reuters