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Obama, Hu to Discuss Chinese Currency

U.S. President Barack Obama is expected to discuss Chinese currency practices when he meets Saturday with Chinese President Hu Jintao at the G-20 summit in Toronto.

U.S. Commerce Secretary Gary Locke told frustrated lawmakers on the Senate Finance Committee that China's currency is undervalued, despite Beijing recently ending its peg to the U.S. dollar.

"The appreciation of the currency would do more to help the sale of U.S. goods, and it is essential to the world economic rebalancing that President Obama has supported and called for and urged the Chinese leaders in all of his face-to-face discussions with them," said Locke.

He added Treasury Secretary Timothy Geithner will be closely monitoring how far and how fast the Chinese let the currency appreciate.

Locke says the Commerce Department is considering requests in two cases brought on by U.S. firms to apply countervailing duties against China's currency. The firms want the currency practices to be treated as an illegal subsidy.

Lawmakers in both parties were not impressed with China's recent move regarding the yuan, calling it just another distraction by Beijing. In the hearing Wednesday, they accused China of keeping the value of the currency artificially low to give Chinese-made goods a price advantage on world markets.

The committee chairman, Democrat Max Baucus of Montana, says he will reintroduce legislation that calls for the United States to take currency undervaluation into account when imposing anti-dumping tariffs.

"I think we [have] to start moving more aggressively in respect to currency. My judgment is that China just took one little baby step and tried to get everybody off its back and that is not going to work. We [have] to show that we are serious," he said.

Senator Charles Schumer, a Democrat from New York, says he will press for a Senate vote on the legislation.

"If China appreciated its currency and moved toward a floating exchange rate, it would do more for jobs here in the United States than any single stimulus program that we could pass into law," said Schumer.

Commerce Secretary Locke says the Obama administration needs to work with Congress to make sure the U.S. economic relationship with China is more balanced and provides more benefits for American workers and businesses.

He says the global playing field will not be level unless China starts to take on a broader range of commitments that would bring it in line with the world's other large trading partners.