(Reuters) - The United States on Monday reiterated its call for China's currency to be market-based, as lawmakers warned they would act if there was no movement from China on revaluing the yuan.
The president has spoken repeatedly and recently that China's currency must be market-based, White House spokesman Robert Gibbs told reporters.
With China on holiday there was no official response from Beijing to a weekend announcement that U.S. Treasury Secretary Timothy Geithner would postpone a report due out on April 15 that could have branded China a currency manipulator.
However, a Chinese government economist said that while the U.S. decision to delay the contentious report was a positive signal that would permit more talks, it did not mean Beijing will change the value of the yuan any time soon.
At least the U.S. side has created some room for further consultations and negotiations, said Huo Jianguo, head of the Commerce Ministry's think-thank, of the U.S. decision.
But I don't think there will be a yuan adjustment in the near-term. We need to see whether China's export recovery will be sustained and need to see whether companies can cope with a stronger yuan.
The U.S. decision followed Thursday's announcement that Chinese President Hu Jintao will attend a nuclear security summit meeting in Washington April 12-13 and seems to be a move to keep tensions in the key bilateral relationship in check.
G20 AND BILATERAL TALKS
Geithner said he would use meetings of the Group of 20 and a U.S.-China strategic dialogue in Beijing in May to urge China to budge on the yuan. President Barack Obama, many U.S. lawmakers and several economists say the currency is kept artificially low to boost Chinese exports.
Each and every time that the president and this administration meets with the leadership in China, this issue's brought up, Gibbs said.
China's yuan barely reacted in offshore forward Asian markets on Monday, apparently reflecting investor sentiment that the U.S. decision will not shift of the value of the yuan a year hence.
One-year NDFs, units which traders use to bet on the future value of a currency, moved from 6.645 per dollar to 6.639, which still implied an appreciation of about 2.8 percent in a year's time. But markets in Hong Kong and Shanghai, the main centers for yuan trading, were closed for holidays.
Analysts have said Beijing, loathe to be seen as bending to foreign pressure, may feel freer to nudge up the yuan if Washington dims its spotlight on public demands.
LAWMAKERS NOT MOLLIFIED
But the U.S. lawmakers who have been critical of China's policy of pegging the yuan to the U.S. dollar have warned they will step in if bilateral or international discussions fail to persuade China to change its currency policy.
If there's no substantive sign of action, Congress will be forced to act, said a congressional aide, speaking on condition of anonymity.
Those remarks followed a warning on Saturday by Sander Levin, chairman of House of Representatives Ways and Means Committee, that if the multilateral effort does not result in China's making significant changes, the administration and Congress will have no choice but to take appropriate action.
Several Chinese economists quoted in the overseas edition of the People's Daily, the official newspaper of China's ruling Communist Party, maintained that the yuan was not to blame for the U.S. trade deficit.
But Li Daokui, a member of the central bank's monetary policy committee, said China could nonetheless buy more U.S. goods to ease pressure from the White House and Congress.
China can increase purchases from (U.S.) states facing mass unemployment because of recession in the manufacturing sector, said Li, a Harvard-trained economist at Tsinghua University in Beijing.
Beijing let the yuan rise 21 percent against the U.S. dollar between July 2005 and July 2008 before effectively repegging the currency, also called the renminbi, near 6.83 to the dollar to help the economy through the financial crisis.
The United States' deficit in trade with China fell to $227 billion in 2009 from a record $268 billion in 2008, largely the result of the global recession, but the Obama administration is keen to lift exports and employment.