WASHINGTON (Dow Jones)--President Barack Obama said Thursday the world would benefit if China moved to a more market-based currency system.
"As I've said before, China moving to a more market-oriented exchange rate would make an essential contribution to that global rebalancing effort," Obama said in remarks prepared for delivery at the U.S. Export-Import Bank's annual conference.
Obama, who rarely comments on currency matters, said a change in China's foreign-exchange rate would help the Group of 20's broad drive to rebalance the global economy, with countries with external surpluses, like China, boosting consumption and domestic demand and countries with external deficits, like the U.S., saving and exporting more.
The president's remarks also come a month ahead of a semiannual Treasury Department report that could designate China as a currency manipulator.
The administration is facing increasing calls from both ends of the political spectrum to take action against China's currency policy, which has been to effectively re-peg the yuan's value to the dollar since halting a gradual appreciation in mid-2008. People's Bank of China Governor Zhou Xiaochuan suggested over the weekend that the de facto peg was a temporary crisis measure, with plans to allow more flexibility sometime in the future.
In a letter to Treasury Secretary Tim Geithner, Sen. Sherrod Brown (D., Ohio) on Thursday called for China to be branded a currency manipulator.
"In the face of China's inaction, it is clear that the United States must move to ensure a level playing field on behalf of the workers and businesses disadvantaged by this inequitable, mercantilist trade policy," Brown wrote.
Alan Tonelson, research fellow at the U.S. Business and Industry Council Research Fellow, also urged the administration to slap the manipulator label on China, citing the expanding trade gap. The bilateral deficit with China rose 1% to $18.29 billion in January, despite a decline in imports from the country to the lowest level since June 2009, the Commerce Department reported Thursday.
"If President Obama doesn't get U.S. China trade policy right, he won't get anything important in trade policy right, and hopes for a real U.S. economic recovery go out the window," said Tonelson, whose group represents about 1,900 U.S. manufacturers.
During a panel discussion before the president's speech, U.S. officials cited a range of other challenges that are contributing to rising trade tensions with China, including intellectual property rights, or IPR.
"We benefit from our trade relationships with China, and we want the Chinese market to be open and fair to American products," said Jacob Lew, deputy secretary of the State Department, adding that the U.S. has made clear it will be vigilant on protecting IPR.
U.S. Trade Representative Ron Kirk said he didn't want to appear to be "beating up" on China, but he reiterated concerns about counterfeiting and other IPR issues. The U.S. is working within the World Trade Organization to enact an Anti-Counterfeiting Trade Act to toughen enforcement, he said.
Meanwhile, the Commerce Department announced Thursday preliminary antidumping duties on imports from China of potassium phosphate salts, which are used in industrial cleaning products, fertilizers and food additives.
The department is investigating more than 20 countervailing and antidumping cases involving Chinese companies, as U.S. producers are increasingly seeking relief from what they claim are unfair trade practices. China, complaining of protectionism, has challenged some of the duties at the World Trade Organization.
