The US Treasury is delaying by several months a report on whether China manipulates its currency, the yuan. Treasury Secretary Tim Geithner said he would delay the report, which was due out on 15 April, until after a series of high-level international meetings. The decision may improve US relations with China but could upset some American lawmakers.
It is no secret that the US believes China keeps the yuan artificially low, harming the US economy. But saying that in an official report is a different matter. It would set off a chain of events that could eventually result in unilateral US sanctions against Chinese products and could damage relations between the two countries. Mr Geithner justified pushing back his report to the US Congress by saying he would use upcoming events, including a G20 meeting and a US-China summit, to try to encourage the communist superpower to change its currency position.
Branding China as a currency manipulator at this stage would cause headaches for the US administration. Chinese President Hu Jintao is due in Washington later this month for a nuclear summit, and the US is expected to push hard to sign China up to sanctions against Iran over Tehran's nuclear programme. But the US government is under pressure from its own lawmakers to take a tougher line on China's currency.
A number of members of the US Congress believe the low yuan - which has been pegged to the dollar for nearly two years - is directly affecting their local economies.