US Treasury Secretary Timothy Geithner on Thursday said it was "past time" for China to lift barriers to US exports, as he faced angry lawmakers' demands for sanctions against Beijing. Geithner abandoned his previously restrained approach to bluntly warn China it must let the yuan rise in value against the dollar to end trade distortions.
Facing November elections shaped by voter anger at the sour economy, US lawmakers are weighing bills that would slap sanctions on Chinese goods, amid accusations that Beijing keeps its currency - and thereby its exports - artificially cheap. "It is past time for China to move" Geithner said, listing currency and other trade distortions as "core objectives" with China.
The US Treasury has consistently avoided labelling China a currency manipulator in its semi-annual reports to Congress - a move which could set in motion a process for retaliation - but has maintained that the yuan is undervalued. The issue appeared to have been defused in June when China pledged in June to let the yuan trade more freely against the dollar, but Geithner has reiterated that he is still not satisfied with Beijing's moves to loosen its grip on the currency.
Despite the "important" pledge, Geithner said the Chinese currency's value was "essentially" unchanged in the last two years. "China has continued to intervene in the exchange markets on a very substantial scale to limit the upward pressure of market forces on the Chinese currency."
Since then, it has appreciated about 1.6 percent against the greenback and traded at 6.7181, its highest level since June, on Wednesday. China on Thursday warned outside pressure on Beijing to change its currency regime would be counterproductive.