Bernanke urges Congress to focus on wider issues with China, not just currency

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Congress should focus on issues beyond just currency manipulation with China, since the US and China have a wide range of issues on which they must cooperate, Federal Reserve Board Chairman Ben
Bernanke told the Senate today.

"It s only one of many issues," Bernanke said about China currency
complaints at the Senate Banking Committee during his second day of testimony for his semi-annual Monetary Policy Report to Congress.

Bernanke repeated his contention from yesterday s House hearing
that he is frustrated with the slow pace at which China is allowing
it's currency to appreciate. He told senators that he believes
allowing a more flexible yuan policy would allow China to control its monetary policy, and also reduce the current distortion in favor of
exports over economic growth led by increased domestic
consumption.

Bernanke said increased domestic consumption and the creation of a social safety net in China, in addition to a more flexible currency
policy, would help lower the US trade deficit with China.

Committee Chairman Christopher Dodd, a Connecticut Democrat,
asked Bernanke to clarify a December 2006 prepared speech in
which Bernanke said China s undervalued currency is an "effective
subsidy." Bernanke said the undervalued currency is "not a subsidy
in the legal sense," and said legally a subsidy is a direct payment. "Nothing like that is going on," he said.

However, he said the undervalued yuan artificially sends resources
into China's export sector, and therefore is a distortion that affects
trade and acts as an "implicit" subsidy.

Bernanke s analysis is in contrast to that done by many US industry
associations, which argue that undervaluing the yuan is the same as overpaying Chinese exporters when they swap US dollars earned
through trade for yuan.

Dodd warned that legislation on currency could be approved soon
in the Senate, and said he is hoping to approve a bill he introduced with other Banking Committee members before the August recess.

That bill would make it easier for the Treasury Department to cite
foreign countries with misaligned currencies, and require Treasury
to create a plan of action against cited countries.

Dodd also said he has spoken with members of the Senate Finance Committee, which has its own bill that would create specific
sanctions against China and other countries with misaligned
currencies.

迪克

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Amigo

Thanks!  BY

JKL

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