US Treasury Secretary John Snow, speaking on Monday as a Chinese delegation visited the US Treasury for talks on currency and other issues, said Beijing should act now loosen its fixed currency regime. The US Treasury chief was responding to reporters' questions after addressing a local business leaders' group on the issue of Social Security. He said China has taken the necessary steps to ease the peg it maintains on its yuan currency to the US dollar. "They've made great strides with their financial system, they've said they want to do it, they've affirmed their commitment to doing it," Snow said when asked about a potential Chinese currency revaluation.
"Now is the time," Snow said, though he said he would not suggest what Beijing's timetable was.
A group of officials from the People's Bank of China was in Washington on Monday for discussions that include foreign exchange.
US Treasury officials portray the talks as regular technical discussions on a range of economic and financial issues but they occur when speculation is high that China may be near a revaluation of the yuan.
The officials taking part in the meetings are at the deputy assistant secretary level or below, the US official said. In the bureaucratic hierarchy at Treasury, deputy assistant secretaries fall beneath assistant secretaries, under-secretaries, a deputy secretary and the secretary.
The United States and European countries have been pressuring China to loosen its fixed currency regime as a way to help rebalance global economic growth.
US manufacturers particularly complain of unfair competition from cheap Chinese imports because they believe the yuan currency, also known as the renminbi, is undervalued by as much as 40 percent.
The yuan is currently pegged in a narrow band around 8.28 to the dollar.
Snow said he was encouraged by moves China has made to prepare for yuan flexibility, but "I don't have a timetable."
Snow's message to the Connecticut business leaders was that the Bush administration thinks it is making progress on its bid to have private investment accounts as part of the Social Security System.
"There's no turning back. This is the course we're on," he said. Public opinion polls show significant unease about the administration's proposals but Snow said he was confident that Congress would be able to agree on a plan this year for making private accounts the law.
He said "lots and lots of quiet conversations are going on" on Capitol Hill to try to secure bipartisan support for the accounts, which would permit workers under 55 years of age to divert part of their payroll taxes into accounts that would be invested in stocks and bonds.
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