Snow will press China over yuan flexibility

US Treasury Secretary John Snow said on Thursday he will tell Chinese officials next week that Beijing needs to permit more flexibility in setting its the value of its currency, the yuan.
Responding to questions from New York Democratic Sen. Charles Schumer at the Senate Finance Finance Committee, Snow said that when he meets Chinese officials at a Group of 20 meeting in China he will press the case that China must do more to let market forces set its currency's value.
"We will be meeting with the Chinese authorities, the economic policy and political leadership, to make the case that it's time to see greater flexibility," Snow said, adding "The commitment has been made, the initial step was made, but we need to see more flexibility incorporated into the currency reflecting real demand (and) supply markets."
Many Capitol Hill lawmakers feel China's move in July to modestly revalue its currency upwards by 2.1 percent was too little and blame America's mounting trade deficit on what they term unfairly cheap Chinese-made imports into US markets.
Snow, who is visiting Japan at the beginning of next week before heading for China where he will make stops in Shanghai and Chengdu before arriving in Beijing, was pressed on whether China risks being named a currency manipulator in a Treasury report expected in early November.
Treasury's most recent such report, released in May, found that no country used foreign exchange to gain an unjust edge in the latter half of 2004 but pointedly warned that China could be named a manipulator if it did not end the currency peg it then maintained.
In July, China abandoned its policy of pegging the yuan, also known as the renminbi or RMB, at 8.28 to the dollar, revaluing it by 2.1 percent and moving to a managed float with reference to a basket of currencies.
In theory, the yuan is allowed to move up or down in value against the dollar by 0.3 percent a day. But since the revaluation two months ago, it has appreciated only by about a further 0.2 percent.
Schumer, who has been one of the leaders in Congress in criticising China's currency policy, said that showed Beijing's lack of commitment to real change.