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By Jason Subler

Written by: Staff
|

BEIJING, Mar 23 (Reuters) Two U.S. senators pressing China to loosen currency controls repeated their message in Beijing on Thursday, but an official Chinese newspaper said their visit had little chance of effecting change.

Charles Schumer, a New York Democrat, and Lindsey Graham, a South Carolina Republican, are authors of a bill that threatens China with a 27.5 per cent tariff on exports to the United States unless Beijing lets the yuan rise significantly against the dollar.

''You ask us, well what about our legislation?,'' Schumer told a news briefing.

''Well, the jury is still out. We need some concrete signs of movement. It doesn't have to be the way that we propose, we've always said that. But we need to know over a discrete and reasonable period of time that the goal of having the Chinese currency float and market forces control it ... should occur.'' But in an editorial on Thursday, the official China Daily said: ''It is unlikely that the differences will be settled during the visit of the two senators.'' ''But it is a good opportunity for the Chinese hosts to say this again: U.S. restrictions on some high-tech imports to China are unnecessary. Lifting these restrictions would greatly help American exporters no matter how one calculates the trade figures.'' The Bush administration opposes the Schumer-Graham bill, but it could go to a vote by March 31 -- weeks before China's Hu Jintao makes his first trip to Washington as president.

Many U.S. lawmakers and manufacturers believe the yuan is undervalued, giving China's exports an unfair advantage that has cost millions of American jobs and fuelled a bilateral trade gap that hit a record 2 billion last year.

China maintains that it is doing what it can to effect greater flexibility in the yuan, but that it needs to proceed cautiously to avoid shocks to its economy and fragile banking system.

The central bank reiterated in a statement on Thursday that it would keep the yuan's exchange rate basically stable, while pushing ahead with plans to allow for further flexibility.

A spokesman for China's Foreign Ministry said on Thursday that confrontation was not the way to change Chinese currency policy.

''They should be addressed with a positive attitude, which is to resolve them through equal negotiations, not by imposing pressure or politicising and exacerbating them,'' spokesman Qin Gang said of economic disputes with the United States.

The yuan closed at 8.0277 against the dollar on Thursday, meaning it has now appreciated about 1 per cent since last July's 2.1 per cent revaluation and shift to a managed float.

The yuan's gains against the dollar have quickened in recent weeks, and it reached its strongest level against the dollar on March 20, at 8.0232.

The two senators, along with Oklahoma Republican Tom Coburn, met Foreign Minister Li Zhaoxing on Tuesday and central bank governor Zhou Xiaochuan on Wednesday.

REUTERS SD PM1908

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