WASHINGTON, Sept 17, (AP): The Obama administration agrees with irate members of Congress that China is manipulating its currency, but the Treasury secretary says any US response must be fashioned carefully to avoid retaliation by a huge US trading partner.
Retaliation, Timothy Geithner told congressional committees on Thursday, would put at risk above all US companies and businesses that deal with China.
Committee members pressed hard for a commitment from Geithner to take a tougher stand with China over trade practices that they say have cost Americans millions of jobs.
Both Republicans and President Barack Obama’s Democrats on committees in both congressional chambers told Geithner that China is manipulating its currency. They said that and other practices have led to the huge trade gap between the two countries as well as the job losses in the United States.

Members of the Senate Banking Committee said they were frustrated because the administration failed to cite China as a currency manipulator in its latest report. Senators expressed similar exasperation for years during the previous Republican adminiostration, headed by President George W. Bush. The Obama White House took the same position as Bush’s and previous administrations: to urge China to move faster to allow its currency to rise in value against the dollar.
Geithner said the administration was ready to work with Congress on an effective strategy. But he cautioned about the vulnerability of US companies and businesses to retaliation by China.
American manufacturers contend that the Chinese currency is undervalued by as much as 40 percent. That has given Chinese companies a tremendous competitive advantage by making US products more expensive in China and Chinese goods cheaper in the United States.

Under a 1988 law, the Treasury Department is required to submit a currency report to Congress every six months and cite any country that it finds is manipulating its currency to gain trade advantages.
A number of senators complained that the Obama administration, like previous administrations, failed to identify China as a currency manipulator.
“At a time when the US economy is trying to pick itself up off the ground, China’s currency manipulation is like a boot to the throat of our recovery,” Sen. Charles Schumer, a leading Democrat, said. “This administration refuses to try and take that boot off our neck.”
Committee Chairman Christopher Dodd, a Democrat, and Sen. Richard Shelby, the top Republican on the panel, said they had grown frustrated listening to a string of administrations refuse to cite China as a currency manipulator.

“The American public is tired of hearing about the sophisticated nuances of international diplomacy,” Shelby said. “They want the administration to fulfill its promise of balanced international trade.”
Geithner said the administration was willing to work with Congress to toughen the law. But he stopped short of endorsing two bills in the House and Senate that would give the administration more power to sanction China on the currency issue.
Supporters are pushing for a vote before the November elections on a House bill sponsored by 143 members. The legislation would expand the definition of illegal government subsidies to include government currency manipulation. That would open the door to US trade sanctions against Chinese products.

Geithner said the administration was taking a “careful look” at the House bill. It wanted to determine whether it was consistent with America’s WTO obligations and whether it would produce the desired results of pushing China to stop undervaluing its currency.
During the marathon hearings Thursday, Geithner told both committees that the key point was for China to understand the growing frustration in the United States.
China has made some changes. Starting last week, its central bank has allowed the currency, the yuan, to rise more in value against the dollar. That followed an announcement in June that it would allow more flexibility in the currency.
Still, Geithner said those changes have had little impact. The currency has risen by only 1.5 percent against the dollar in the past three months, he said. He did not indicate whether the administration might cite China in the next currency report, due on Oct 15. But he stressed that the administration was looking for more movement than it has seen so far.

“We would have to see a very substantial change over time for that judgment to change,” Geithner told the senators.
Geithner’s comments were part of the administration’s tougher tact with China over trade ahead of the US midterm elections. The weak economy and high unemployment have emerged as the top issues with American voters.
On Wednesday, the administration announced that it was filing two new trade cases against China before the World Trade Organization. One of the cases contends that China violated global trade rules by imposing penalty tariffs on US-made specialty steel products. The other case alleges that China is discriminating against US credit card companies in favor of a state-owned financial services firm.