The Obama administration is denying that it delayed a report on China's currency valuation to help secure Beijing's support for tougher international sanctions against Iran over its nuclear program.
For years, the United States has complained that China artificially depresses the value of its currency as part of an export-oriented economic model. And so Treasury Secretary Timothy Geithner raised eyebrows Saturday when he announced a delay in the Obama administration's report to Congress on Beijing's currency policies and their impact on the U.S. economy.
The report was to be issued April 15, days after a nuclear security summit in Washington that is to be attended by Chinese President Hu Jintao. The gathering is expected to address persistent international concerns about Iran's nuclear program, which Tehran insists is for peaceful purposes but which many other nations believe is geared towards building atomic weapons.
China, which wields veto power at the U.N. Security Council, has resisted strengthening international sanctions against Iran. Appearing on ABC's "This Week" program, White House economic advisor Lawrence Summers was asked if the Obama administration's currency report delay is tied to a diplomatic effort to secure China's backing for additional pressure on Tehran. "No. It is being delayed because it is part of our international economic dialogue," he said.
Summers said the administration is delaying the report to give it more time to compile information based on upcoming meetings with America's economic partners that share U.S. concerns over currency manipulation. He stressed that U.S. economic interests are being defended on the world stage. "Given the seriousness of the recession that we have been through, given the number of Americans who are out of work, the economic issues have to be at the center and will be at the center of our diplomacy," he said.
A devalued currency makes Chinese exports cheaper and more affordable to consumers worldwide, while boosting the price of U.S. exports to China. For decades, the United States has consumed more foreign goods than it exports, incurring massive trade deficits. One of America's largest trade imbalances is with China.
Christina Romer, who heads President Obama's Council of Economic Advisors, says currency valuations matter. She spoke on NBC's "Meet the Press" program. "Certainly the exchange rate is an issue, not just for the United States, but [also] for Chinese consumers and for other countries. A lot of emerging market economies say that what is happening with China's exchange rate is harmful to them," she said.
Beijing has rejected charges of currency manipulation and suggested the allegations amount to an excuse for other nations to pursue protectionist trade policies.
Some U.S. lawmakers are advocating a tougher stance by Washington towards China on economic matters, even as they acknowledge the need for Beijing's assistance in pressuring Iran over its nuclear program.
Democratic Senator Arlen Specter of Pennsylvania said, "The Chinese president is coming to the United States, and we do need concessions as to what is going to happen with sanctions on Iran. But we have a real problem with the Chinese. They are very shrewd. We cannot stand back and let them manipulate the currency and run us ragged [harm us] on the economy."
Specter was speaking on "Fox News Sunday".