WASHINGTON — Maintaining pressure on China to revalue its currency, U.S. Treasury Secretary John Snow on Thursday named Olin Wethington to be his special envoy and work directly with the government in Beijing.
“This is a critical time for China to implement necessary economic reforms, most notably reform of its currency regime and the adoption of market-based exchange policies,” Snow said in a statement.
Wethington will deal with China regarding its monetary policies and consult with other governments, particularly in Asia.
“[Currency] reform is in China’s best interest, and it is in the best interest of the global economy,” Wethington said in a statement.
The appointment comes two days after the Bush administration turned up the heat on China to allow the yuan to rise against the dollar, raising the possibility that the U.S. would declare that China manipulates its currency if it fails to respond. Such a designation could lead to World Trade Organization involvement and economic sanctions.
China has maintained an exchange rate of 8.28 yuan to $1 since 1995. U.S. manufacturers complain that China artificially undervalues the yuan, lowering prices on exports by as much as 40 percent and giving China an unfair trade advantage.
The flurry of activity on China’s currency practices reflects a growing interest in the issue on the part of lawmakers and the domestic industry.
“What’s been done so far has been inadequate,” said Thea Lee, chief international economist for the AFL-CIO. “We’re waiting to see some results, and it’s been such a long time with so little to show for it that we’re not particularly impressed.”
Last year, the administration turned down the union’s Section 301 petition to address China’s trade policies. Lee said China’s currency policies put U.S. producers and workers at a competitive disadvantage.
“It’s really equivalent to the Chinese government subsidizing their exports and leveling a tariff on their imports,” she said.
Wethington brings a background of financial diplomacy to his new role. He served as executive secretary of the economic policy council at the White House and assistant secretary for international affairs at Treasury during the administration of President George H.W. Bush. More recently, he was director of economic policy with the provisional authority in Iraq and served as a counselor to the Treasury Secretary.
This story first appeared in the May 20, 2005 issue of WWD. Subscribe Today.