US won't challenge China on currency

WASHINGTON -- The Bush administration yesterday said it would not brand China as a country that manipulates its currency to gain unfair trade advantages -- in spite of growing pressure in Congress to take punitive action to deal with a US trade deficit with China that hit a record $202 billion last year.

Treasury Secretary John Snow, however, said he is ''extremely dissatisfied" with the pace of China's currency reforms.

US manufacturers contend China has been artificially keeping its currency devalued by as much as 40 percent against the dollar, giving Chinese manufacturers a huge competitive advantage.

The administration said it did not believe China met the technical legal definition of a currency manipulator.

Critics were quick to attack.

''By failing to designate China as a manipulator . . . the United States comes off as a paper tiger unwilling to stand up for its domestic industrial sector," said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, which represents US textile and clothing companies.

''Secretary Snow has been consistently rolled by the Chinese government in his yearslong but unsuccessful effort to get China to take action on its highly undervalued currency," said Kevin Kearns, president of the US Business and Industry Council, which represents many medium- and small-sized manufacturing companies.

The report noted that China in July said it was abandoning a fixed link of the yuan's value to the dollar, although since that time the yuan has risen in value by only about 3 percent.

''We are extremely dissatisfied with the slow and disappointing pace of reform of the Chinese exchange rate regime," Snow said.

The currency report, which the administration must present to Congress every six months, was delayed until after Chinese President Hu Jintao and President Bush discussed the currency dispute during a White House meeting on April 20. The administration had hoped Hu would signal China would move faster to let its currency rise against the dollar; no such announcement came out of the summit.

A designation as a currency manipulator would have triggered consultations between the two nations and could have led to trade sanctions if the United States won a case on the issue before the World Trade Organization.