WASHINGTON (AFP) - US President George W. Bush's administration rejected a call by US lawmakers to take China to the World Trade Organization for "currency manipulation."
The US Trade Representative's office said such measures would not help, and might hinder, Chinese progress towards leting the yuan free from a fixed peg with the dollar.
Many US exporters complain Beijing is holding the yuan's value at an unrealistically low level of about 8.3 yuan to the dollar, making Chinese-made goods unfairly cheap in the United States and US-made exports too expensive for the Chinese.
On September 30, the USTR received a petition from Democratic senators Carl Levin, of Michigan and Charles Schumer, of New York, along with 28 other members of Congress.
It demanded the USTR file a WTO complaint against China if Beijing failed immediately to eliminate the "undervaluation" of the yuan.
In its formal reply Friday, the US trade office rejected the proposal.
"As we have previously made clear, the administration believes China must move faster to adopt a flexible, market-based exchange rate and we have acted aggressively to persuade the Chinese government to undertake the complex transition toward that goal," it said in a statement.
"Working closely with US Treasury officials, China, according to Governor Zhou (Xiaochuan) of China's People Bank, has made this a top priority and has made a series of policy moves to liberalize rules governing foreign exchange transactions, moved to strengthen and develop the finance sector, adjusted interest rates, and taken other steps toward increasing flexibility in financial policymaking; these are clear signs that the administration's efforts are paying dividends," the statement read.
"A Section 301 action would not assist in these efforts, and indeed could be more damaging than helpful at this time. We therefore must decline to accept the course of action recommended through this latest petition."
In a statement released October 1, the lawmakers had pressed the USTR to take WTO action so as to lock China into a process aimed at breaking the yuan-dollar peg.
"It's time for the administration and China to get off the dime when it comes to the yuan," Levin said at the time.
Wei Benhua, deputy director of the Chinese State Administration of Foreign Exchange, said in Beijing this week that China's long-term goal was "to achieve complete convertibility of RMB (yuan)," according to Xinhua news agency.
11/12/2004 - 23:04 GMT - AFP