US advises coalition against yuan policy

NEW YORK: US Secretary of State Hillary Clinton said Friday it is time to stand up to China as she suggested an international coalition could form to force Beijing to raise the value of its currency.

Sharpening the US attack over a China currency policy deemed to undermine US exports and jobs, Clinton said after a speech in New York that the Chinese "continue to try to game the system to their advantage and our disadvantage."

"I think it's appropriate and fitting and timely for us to be standing up and saying, 'This is not acceptable.'"

Clinton, who was speaking at The Economic Club of New York, said other countries suffering from China's yuan policies could join forces.

"It is not only distorting the market, it's not only making our exports more expensive, it is now beginning to impact on other countries as well. It's not the United States alone saying 'China needs to rebalance this artificial policy of depreciation,'" Clinton said.

"We do have to expect everybody play by the same rules. In the absence of that we have to put together an international coalition of countries that have the same economic stakes as we do in a rules-based system."

Many in Washington believe China keeps the yuan unfairly low against the dollar, giving its goods an edge of as much as 30 percent over similar US products, widening the trade deficit and costing American jobs.

The administration has been walking a tightrope on the China currency bill that passed the Senate, facing rising political pressure on the issue as an election year approaches in which President Barack Obama must win midwestern rustbelt states which say they are losing a competitive edge to Chinese industry.

The White House says it sympathizes with the motivation of the bill and a desire to address Chinese currency rates, but argues that any bill that finally emerges from Congress must comply with Washington's international obligations amid fears the legislation could infringe global trading rules.

Officials say the legislation as it stands would need to be changed, though many observers doubt that it will ever be brought up for a vote in the House after Republican Speaker John Boehner criticized it.

Obama has frequently criticized China's currency rate policy, despite a slow recent rise of the yuan, which officials say is insufficient, and in recent weeks has escalated his rhetoric.

Earlier Friday Chinese Premier Wen Jiabao warned that rising protectionism was damaging the global economy. While he made no specific mention of the United States, he said countries should be "rational" in dealing with trade disputes as the world grapples with a mounting debt crisis.

Clinton said the United States wanted a "rules-based reciprocity system on border barriers, on tariff barriers, non-tariff barriers."

"Right now they are quite depending on us and our market, so we still have leverage and a certain ability to influence the future of events, and we have allies now that we did not have just a few years ago," she said.

However a tough stand did not mean a potentially ruinous trade war.

"We have to be smart. We can't be protectionist in a classic 1930s sense," Clinton added. (AFP)