WRAPUP 2-U.S. unlikely to push China hard on currency issue

(Adds comments by Schumer, market expectations)

* U.S. unlikely to push hard for China yuan rise

* Trying to bring global pressure to bear on currency

By Glenn Somerville

WASHINGTON, May 19 (BestGrowthStock) – The United States will
continue nudging China at top-level talks in Beijing next week
to let its yuan currency appreciate, but trade issues appeared
to be higher on the U.S agenda ahead of the sessions.

Treasury Secretary Timothy Geithner and the department’s
senior coordinator for Chinese affairs said on Wednesday they
will urge China to see yuan appreciation as being in its own
interest as well as that of the global economy.

But next Monday and Tuesday’s Strategic and Economic
Dialogue in Beijing is essentially cast as one in a series of
gatherings between now and late June in which the Obama
administration will try to gently push its point that Beijing
should act.

“It’s very important, and we’ve made very clear that a more
market-oriented exchange rate would contribute to balanced,
sustainable growth,” David Loevinger, Treasury’s senior
coordinator for Chinese affairs, said at a briefing.

Earlier, Geithner said yuan appreciation was not just a
U.S.-China issue but one involving the whole global economy.
China has amassed huge trade surpluses and foreign reserves
while becoming an exporting powerhouse. Now, the United States
and others want China to boost consumption at home.

The U.S. Treasury has postponed a report on currency
practices of key trade partners past a scheduled April 15
release, saying it wanted to explore the issue further at S&ED
talks and at meetings of Group of 20 finance ministers in early
June and G20 political leaders later next month.

CLOCK STILL TICKING

Many analysts saw that as an effective deadline for Beijing
to resume letting its yuan, also called the renminbi, rise in
value or risk being named a currency manipulator with potential
trade sanctions to follow.

Democratic Senator Charles Schumer and nine other senators
this week wrote to Geithner urging him to take a stern line
with Chinese officials over Beijing’s refusal to release an
International Monetary Fund report that they believe concluded
China manipulates the yuan’s value for a trade advantage.

The staff report was part of the IMF’s annual consultations
with China last summer. Most countries let the IMF release the
staff assessments. China had done so in previous years but did
not this time.

Schumer said U.S. officials should push China in next
week’s talks to release the report.

Geithner said he didn’t know when China will act on its
currency.

“I don’t know when they’re going to move,” he said in an
interview on CNBC television. “But I think it’s very much in
their interest for them to move.”

Trading in offshore dollar/yuan forwards on Wednesday
implied that markets thought chances for future yuan
appreciation were lower. But trading was thin and market
participants were awaiting next week’s talks for any hint of a
shift in China’s yuan policy.

One factor complicating efforts to push China toward
resuming the yuan’s appreciation — a move it permitted from
mid-2005 until mid-2008 but then abruptly halted — is the
recent steady decline in the euro’s value.

That puts China’s exports to Europe at risk because a
weaker euro raises import prices and is likely to increase
Beijing’s reluctance to let the yuan rise in value.

EUROPEAN CRISIS A WORRY

A Chinese Ministry of Commerce report issued on Wednesday
said the yuan has risen nearly 14.5 percent against the euro so
far this year and predicted it will hurt exports this year.

Loevinger linked Beijing’s stated concern about the size of
U.S. budget deficits with the U.S. call for China to boost
consumer spending at home rather than relying on exporting its
way to wealth.

“The administration is very committed, once the recovery is
fully assured, to bringing the fiscal deficit down to a
sustainable level,” he said, which may pinch Americans’ ability
to be the world’s most voracious buyers.

“The implication for China is that the U.S. consumer is
going to play a different role in this recovery … and it’s
more important than ever that China accelerate its efforts to
accelerate home-grown consumption-based growth,” he said.

Loevinger said the United States was concerned about
Chinese industrial policies that some say favor China’s
companies over foreign competitors and interfere with trade.

“We have no problem with China promoting innovation … but
we want to make sure that they do it in a way that doesn’t
close off markets for U.S. goods and services,” he said.

Geithner and Secretary of State Hillary Clinton will lead a
delegation of about 200 U.S. officials to the Beijing talks for
the second round of meetings since the Obama administration
took office.

The diplomatic side of the talks will cover a range of
sensitive issues from cooperation on efforts to curb Iran’s
nuclear ambitions to what measures countries can agree on to
reduce pollution and deal with climate change.

The first meeting in Washington last summer made little
impact, but U.S. officials appear to be aiming for a more
significant outcome. Geithner arrives in Beijing on Sunday and
will hold a working lunch with Zhou Xiaochuan. China’s central
bank governor, and a working dinner with Vice Premier Wang
Qishan ahead of the May 24-25 sessions.
Growth Stocks

(Additional reporting by Arshad Mohammed, Paul Eckert and
David Lawder; Editing by Kenneth Barry)

WRAPUP 2-U.S. unlikely to push China hard on currency issue