China is not manipulating its currency, says US

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From Fazle Rashid
NEW YORK, April 16: The United States reneged on its earlier stand of China manipulating its currency to gain an edge in global trade. Washington, since the days of George Bush, has been persistently accusing Beijing for currency manipulation and imploring it to revise upwards the value of its currency yuan. China remained unperturbed even under mounting threats including higher tariffs.
The US treasury department yesterday said China is not manipulating its currency to increase its exports. The new report highlighted the political and diplomatic constraints that the Obama administration faces in dealing with China, the New York Times (NYT) reported today. President Obama during campaign had repeatedly accused China of currency manipulation.
Treasury Secretary Timothy Geithner yesterday refrained from making such accusations and instead praised China for its economic stimulus programme and its move toward a more realistic exchange rate for Yuan, NYT said. China enjoys an edge of overall balance of trade of $2000 billion. An analyst reacting to government's U-Turn said, "it is not in anyone's interest to rock a particular boat".
The United States feel that China will act as catalyst in rebounding the global economy from its deep slide down. China's economy grew by 6.1 per cent in the first quarter. Chinese banks are pumping out loans at a record pace to stimulate domestic investment and consumption. The big question however is when overseas demand for Chinese goods will revive.
Demand from Europe and the United States remains anaemic. China has sponsored Asia's biggest trade fair at Canton. China's export had fallen 17.1 per cent in March.
In Granite City Illinois, the home to US's steel industry, workers reacted with anger at the presence of steel in the market with made in India stamp. The steel mill here has been shut down due to lack of orders and nearly 2000 workers have been laid off. The slogan of Buy American slogan is gaining currency in America thus igniting fear of protectionism rearing its head.
China is no longer shy of flaunting its economic, military and diplomatic muscles. China has in recent days challenged US navy presence, blocked ADB's loan to India and is racing far ahead of the US in reaching to South America with attractive financial offers. China has been negotiating deals to double a development fund for Venezuela to $12 billion, lend Equador $1.0 billion to build a hydro-electric plant, provide Argentina with access to more than $10 billion and lend a Brazilian oil company $10 billion, the NYT said. China's trade with Latin America has grown quickly making it region's second largest trading partner after the US.
European Central Bank (ECB) is against making any direct intervention in the market. ECB will remain focused on acting via the banks. ECB's governing council has shelved until May the unveiling of further measure to combat continental Europe's worst recession since World War II.
Charles Schwab, the biggest independent brokerage in US revealed a 29 per cent drop in its earnings mostly because of severance costs American Aitline report its first quarter loss will be $375 million as it has been hit by declining revenues, fares and traffic. Capital One Financial, a credit card provider said its credit card loss rates are exceeding the unemployment rate.
On the political front, Gordon Brown British Prime Minister whose political ascendancy due to his astute handling of the economic downturn has been significant now finds himself at the receiving end because he promoted a smear campaign against his political opponent without any basis. Brown is accused of spreading lies of a sexual and financial nature against his Conservative party opponent.
Iran is preparing a proposal to end a stalemate over its nuclear ambitions with six world powers including China and Russia who have always tend to protect Iran against US onslaught.