U.S. Assistant Treasury Secretary Tim Adams says China is far too cautious in allowing its currency to rise against major currencies. Adams spoke Wednesday at a Congressional hearing on US China economic relations.
Mr. Adams was under pressure from lawmakers frustrated at the loss of US jobs and the ballooning Chinese trade surplus with the United States. China held its currency steady against the dollar for nearly a decade until last July when it slightly altered its exchange rate policy. Since then the Chinese currency has risen by no more than three percent. Mr. Adams made clear that Washington expects a further revaluation.
"We've not seen the kind of progress that we should be seeing and we want to see," said Tim Adams. "And we're not going to rest until we do see."
The U.S. administration says that the Chinese currency is seriously undervalued. Despite that, it has stopped short of saying China deliberately manipulates its currency exchange rate. Republican Senator Orrin Hatch told Mr. Adams Beijing has violated international norms on copyrights and is unlikely to conform to other trading rules.
HATCH: "If China continues to have a lack of compliance to international standards pertaining to intellectual property protection, how can we trust them to adopt a market based system [on currency]?"
ADAMS: "Well, Senator, that is a very good question. They continue to say all the right things and they continue to repeat and repackage what we've been told both publicly and privately. And when they do repackage it they say it with greater emphasis. But it is time to stop talking the talk and walk the walk. We need to hold them accountable to what they promised to do."
Some experts say the Chinese currency is undervalued by as much as 30 to 50 percent. The belief is that is China revalues significantly, its trade surplus with the United States will fall. That surplus totaled over $200 billion last year. China holds as foreign exchange reserves over $800 billion. Mr. Adams said he did think those holdings represent a problem but he would like the Chinese surplus to stabilize and stop growing.