WASHINGTON — For the second time this year, the Obama administration delayed the release of a report Friday on whether China manipulates its currency, but deflected some of the political heat from angry Democrats by launching an unrelated trade probe.
At issue is whether China deliberately undervalues its currency to make its exports cheaper abroad and imports from other countries more expensive at home. The International Monetary Fund recently said that China's currency, the yuan, is significantly undervalued.
This makes American exports more expensive and imports more attractive, adding to a trade imbalance and tending to impede U.S. job creation.
Treasury Secretary Timothy Geithner first delayed a report to Congress about China's currency policies in July, saying he wanted to use several prominent gatherings of world financial leaders to press China to act. Friday, he said he would delay the report until after Nov. 11-12 meetings involving leaders from the G-20, the 20 most industrialized nations.
The administration's decision is sure to anger some Democrats, who recently assailed Geithner in hearings and criticized President Barack Obama for abandoning campaign promises to get tough on China. The House of Representatives passed a bill before adjourning to campaign before November's elections that would allow the administration to sanction China if it's deemed a currency manipulator.
Treasury's delay conflicts with the advertising theme that many Democratic campaigns are airing. One high-profile ad criticizes the U.S. Chamber of Commerce for allegedly using foreign money to influence U.S. elections, with wads of Chinese currency in the background of these commercials. That ad loses its sting if the administration isn't willing to say China breaks the rules.
Geithner cited progress in announcing his delay.
"Since June 19, 2010, when China announced it would renew the reform of its exchange rate and allow the exchange rate to move higher in response to market forces, the Chinese currency has appreciated by roughly 3 percent against the U.S. dollar," the Treasury chief said in a statement announcing his decision. "Since Sept. 2, 2010, the pace of appreciation has accelerated to a rate of more than 1 percent per month. If sustained over time, this would help correct what the IMF has concluded is a significantly undervalued currency."