Snow urges China to move on currency policy

Speaking before the Senate Banking Committee today, U.S. Treasury Secretary John Snow said that China should "move without delay" to change currency practices that U.S. manufacturers blame for soaring trade deficits and job loss.

In his prepared testimony, Snow said, "China is now ready and should move without delay in a manner and magnitude that is sufficiently reflective of underlying market conditions." He repeated a warning made in last week's Treasury Department report to Congress on foreign countries' exchange rate practices that China could be cited by the U.S. as a currency manipulator, a process that could lead to economic sanctions, if it does not act soon.

Snow said, "China's rigid currency regime has become highly distortionary. It poses risks to the Chinese economy, such as sowing the seeds for excess liquidity creation, asset price inflation, large speculative capital flows, and over-investment." He also said that its pegged currency is a threat to China's neighbors, given its growing might as a trading power and the need for it to contribute to sustained global expansion.