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US Delays Currency Report on China, Brightens Relations

Updated On: Apr 06, 2010

The US Treasury has decided to delay release (originally due out April 15) of a potentially incendiary currency report that may have labeled China a “currency manipulator”, signaling to China that the Obama administration prefers to resolve the dispute diplomatically. Many believe that China undervalues the yuan by 20%-40%, a move which boosts Chinese exporters to the detriment of those elsewhere, including in the US.

Had the report concluded China was manipulating its currency, it likely would have set off a chain of events that resulting in unilateral US sanctions against Chinese products, further aggravating fragile relations between the two countries. Some economists see the delayed report as the administration giving the Chinese some breathing room, propelling them to adjust the yuan accordingly on their own.

Other signs point to a warming relationship between China and the United States. Last weekend, China announced it would consider revising its stance on sanctions against Iran, sanctions that the Obama administration is pushing hard for given its stance on Iran's nuclear regime.

Sources:
US Treasury Delays China Currency Report [BBC News, 3 Apr 2010]
U.S. to Delay Chinese Currency Report [New York Times, 3 Apr 2010]







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