Treasury Undersecretary Tim Adams said on Tuesday that
China's moves so far to revalue its currency were welcome but there was a
widespread expectation that Beijing will do more to let the yuan's value rise.
Treasury Secretary John Snow (3rd L) with appointees of his administration at
the Treasury Department in Washington D.C. August 8, 2005. (L-R) are Assistant
Secretary for legal affairs Kevin Fromer, Under Secretary for International
Affairs Tim Adams, Secretary Snow, Deputy Treasury Secretary Robert Kimmitt,
Assistant Secretary for Domestic Finance Randy Quarles, Comptroller of the
Currency John Dugan and Director of the Office of Thrift Supervision John Reich.
Photo taken August 8 2005.
U.S. Treasury Undersecretary Tim Adams said on Tuesday that China's moves so
far to revalue its currency were welcome but there was a widespread expectation
that Beijing will do more to let the yuan's value rise.
In
an interview with Reuters Television while visiting Tokyo, Adams said the United
States was pleased by the approximate 2 percent revaluation of the yuan that
China announced in July.
"We applauded the move at the time, the breaking
of the 10-year link to the dollar, but built into that applauding is an
assumption that greater liberalization will occur over time," he
said.
Adams was in Tokyo meeting business leaders and Japanese government
officials until Wednesday, when he heads for Dalian, China, to participate in a meeting of deputies
from the Group of 20 countries where currency issues are expected to again be on
the table.
Asked about the potential economic impact of soaring world oil
prices, Adams said it was something that had to be monitored carefully but it
was hard to know whether prices were near levels that cause pain to global
prospects.
"I'm not sure where the threshold is," Adams said. "Obviously
oil at $70 a barrel, $65 a barrel, is something that we should monitor very
closely. It will likely have some effect on the U.S. economy, we don't really
know at this point, but it's something that we'll certainly watch very
closely."
Oil prices were back above $68 a barrel on Tuesday as markets
awaited word on how much damage had been caused by a punishing storm, Hurricane
Katrina, that brought U.S. oil and gas production in the Gulf of Mexico to a
virtual halt.
U.S. crude oil prices rose 92 cents, or 1.4 percent, to
$68.12 a barrel on Tuesday.
While in Tokyo, Adams met U.S. businessmen who
operate in Japan and also was meeting Japanese government officials. He said
that Japan's prospects for stronger growth appeared better than in many years,
helped by stronger consumer spending and more business investment.
It was
hard to gauge how Asia, which is heavily dependent upon imported oil, might be
affected by the recent surge in prices, he said. He added that Japanese
officials had indicated "they didn't seem to think it would have that much of a
direct impact here," so it was hard to generalize how Asia might fare overall
from costlier energy.
WATCHING INDONESIA
Indonesia in particular
has seen its currency, the rupiah, come under pressure as rising oil prices
worsened the country's balance of payments and raised inflation
expectations.
Adams said "we're watching very closely and we're in touch with
our counterparts there," but he said Indonesia had strong political leadership
and a healthier economy than it had in the late 1990s when its currency was
under pressure.
In an earlier briefing for invited reporters at the U.S.
embassy, Adams was asked whether China's revaluation of the yuan on July 21 was
enough for it to avoid the possibility of being labeled a currency manipulator
in a U.S. report due in October.
Treasury Secretary
John Snow warned, when the last report was issued
prior to China's revaluation, that if it did not move off the currency peg that
it likely would be named a manipulator in the next report to Congress on foreign
exchange practices of U.S. trading partners.
Such a declaration would clear
the way for some type of retaliation, like tariffs against Chinese-made goods,
that many U.S. lawmakers still want but that the Bush administration wants to
avoid.
"I'm not going to foreshadow the forex report, it hasn't been
written," Adams said. "But the reform of the (Chinese currency) system is in and
of itself a significant event."
He added: "But there's an
assumption in that reform that there'll be additional liberalization over time
as the Chinese work toward their stated goal, which is the full float of the
currency."
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