Treasury chief: China must act on currency

US Treasury Secretary Henry Paulson today said China should quickly let its currency rise in value and let market forces play a greater role, in recognition of its own economic might.

‘‘It is quite important that their currency appreciate more rapidly,’’ he told Harvard University students as he continued a series of talks about the importance of keeping US-Chinese relations on an even keel.

Paulson repeated remarks he had made a day earlier that he felt there was ‘‘a clear sense of frustration’’ among US lawmakers and within US industries over Beijing’s reluctance to move more rapidly to a market-determined currency system.

Paulson said it's unusual for a country as integrated into the global economy as China not to have a market-driven currency. The value of China’s currency, the yuan or renminbi, still is managed against that of the dollar.

That "is not sustainable in the longer term,’’ he said.

He said currency reform alone is not enough to correct a record US deficit on trade with China, $233 billion last year. Other structural changes are needed in China, he said, particularly a shift in policy to encourage more domestic consumption and less reliance on exports for growth.

Paulson is facing pressure from US lawmakers who are pressing for a harsher attitude toward China unless it lets its currency rise in value.
(Reuters)