China is not moving quickly enough on currency reform: US Treasury Secretary

US Treasury Secretary Henry Paulson has once again reiterated that China is not moving quickly enough on currency reform, and said he hoped high-level talks next month would deliver results. Paulson in a speech in New York said, ‘They’re not moving in my judgment quickly enough. I feel quite strongly there’s a need to move more quickly in the short term, but we need to get to a point in the intermediate term where China has a market-determined currency’. The two countries are scheduled to hold their next high-level talks in Washington May 23-24, the second round of what is known as the ‘Strategic Economic Dialogue.’ Paulson had started this strategic dialogue with China in December. Paulson has been persistently urging China to take measures rapidly to allow its currency to rise in value against the dollar as the Bush administration sought to fend off a protectionist counterattack in Congress over growing US trade deficits. According to the figures, the US reported a record $232.5 billion trade gap with China. At present, there is no doubt that there is an obvious impression of annoyance with China in political circles and a number of industries throughout America, Paulson outlined in the speech. He went on to say, ‘Many Americans question whether the benefits of our growing trade relationship are evenly distributed.’ The Bush administration earlier this week after holding talks with Chinese officials has stated that China had made no new proposals to resolve a dispute about letting the Chinese currency fluctuate in relation to the dollar. The US treasury secretary also clarified that he is a big believer in a strong dollar and a strong dollar was good for the US. According to the treasury secretary the dollar’s value is set in a competitive marketplace based on underlying US economic fundamentals. But he expressed at the same time his concerns over the fact that China needs to allow more appreciation and flexibility in the yuan’s value in the short term. He also noted that China is transitioning from a planned economy into a market-driven economy and there is no doubt that this process will continue for a number of years. Acknowledging its role in the world economy the secretary stressed that because of its size and its role in the world market, ‘China is already a world economic leader and deserves to be recognized as a leader.’

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