Reuters | Oct 15, 2010 | 10:09pm IST
The Obama administration plans to delay a decision on whether to label China a currency manipulator, a move long demanded by many U.S. lawmakers but also a potentially big wrench in an important relationship. A Senate aide told Reuters the Treasury Department would hold off releasing its semi-annual report on the currency practices of U.S. trading partners.
It was not immediately clear how long the delay would be. Industry sources had said they expected the report to be unveiled at 1 p.m. EDT (1700 GMT) on Friday. The Senate aide, speaking on condition he not be named, said he was "hearing they will delay its release."
A desire to look tough on "unfair" trade practices before the U.S. congressional election on Nov. 2, in which Democrats are battling to keep control of Congress, could tempt President Barack Obama to cite China for the first time in 16 years.
But concern about angering the largest holder of U.S. government debt and the need for Chinese support on a host of international issues could mean continuing diplomatic efforts that have resulted in a nearly 2.5 percent rise in the value of China’s yuan against the dollar in recent months. It is a fine line and many observers think Obama will opt to play it safe with Beijing and give it another pass.
China left little doubt on Friday about the rancor that would ensue if it were branded a currency manipulator — a largely symbolic move by the United States that would mandate more consultations with Beijing but no immediate penalties. "It is entirely wrong for the United States to make an issue of China’s trade surplus and hence put pressure on the yuan exchange rate," Commerce Ministry spokesman Yao Jian said. "The Chinese yuan should not be a scapegoat for United States’ domestic economic problems."
China has also come under fire from Europe as arguments over the appropriate exchange rates to set the global economy back on track intensify before two meetings of the Group of 20 leading economies in South Korea.