China isn't rigging yuan, White House says as critics object

WASHINGTON — The Bush administration on Wednesday said it would not brand China as a country manipulating its currency for unfair trade advantages, provoking protests from U.S. manufacturers.

The decision came in spite of congressional pressure to punish China in light of a U.S. trade deficit with the Chinese that set a record of $202 billion last year.

U.S. manufacturers contend China artificially has kept its currency, the yuan, devalued by as much as 40 percent against the dollar, giving Chinese companies a huge advantage over U.S. products.

The administration's latest currency report to Congress said that the U.S. did not believe China met the law's definition of a currency manipulator.

Critics of Beijing's trade policies accused the administration of failing to deal with a swelling trade deficit that they see as a major contributor to the loss of nearly 3 million manufacturing jobs since President Bush took office in January 2001.

"Bush and the Treasury Department have proven that, when it comes to China, they are all bark and no bite," said Richard Trumka, secretary-treasury of the AFL-CIO. "With no meaningful action coming from Washington, China will continue to undervalue the yuan."

A bill sponsored by Sens. Charles Schumer, D-N.Y., and Lindsey Graham, R-S.C., would impose 27.5 percent punitive tariffs on all Chinese goods coming into the United States unless China quickly allows the yuan to rise in value against the dollar.

Both lawmakers said the failure to cite China would garner more support for their legislation, which won 67 votes on a procedural motion in 2005 in the Senate. Schumer and Graham for months have delayed votes on their bill, based on assurances from the administration that it was making progress on the issue.

"We're tired of making excuses ... to people in my state who are being devastated by currency manipulation," Graham said.

John Engler, the former Michigan governor who now heads the National Association of Manufacturers, warned of a protectionist backlash against Chinese imports.

Kevin Kearns, president of an organization that represents many medium- and small-sized manufacturing companies, said Treasury Secretary John Snow "has been consistently rolled by the Chinese government."

The report noted that last July, China said it was abandoning a fixed link of the yuan's value to the dollar, yet since then the yuan has risen in value by only about 3 percent.

"We are extremely dissatisfied with the slow and disappointing pace of reform," Snow said.

He added, "We will monitor closely China's progress every step of the way."