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US Pressures China to Unpeg Currency

A preliminary vote put China on notice it could face a 27.5 percent tariff on exports to U.S. markets unless it moved to a flexible currency within six months.

The measure is expected to come up for a vote in the Senate again in July.

Snow said the dark mood on Capitol Hill represented "a dangerous situation" and he hoped China recognized and understood that was the case.

Tougher talk from Washington risks getting China's back up over currency reform, and Beijing has indicated it won't be pressured into acting before it feels its banking and financial system can handle increased flexibility.

"The fixed exchange rate coupled with large capital inflows deprives China of the ability to run its own monetary policy or alter domestic interest rates -- greatly diminishing the ability of economic policy-makers to avoid the cycle of boom and bust that has occurred in the past," Snow said

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