BEIJING—China appears increasingly unlikely to move on its currency before the Group of 20 summit next weekend.
China’s government has kept the yuan pegged around 6.83 to the dollar since mid-2008, when the global recession was intensifying. Foreign critics say that undervalues the currency. But the euro’s recent plunge against the dollar means that its value has risen 15% this year against the currency of Europe, China’s largest trading partner.
Officials have said they intend to eventually return to the pre-crisis policy of managing the exchange rate against a basket of currencies, a practice that resulted in a 21% gain against the U.S. dollar from 2005 to mid-2008.
China’s lack of movement is angering some in the U.S. Congress. “The administration constructively set the G-20 meeting as an important juncture for China to change its inflexible currency practices. If China does not act and the administration does not respond promptly thereafter, the Congress will act,” Sander Levin, chairman of the House Ways and Means Committee, said Wednesday.
China’s desire to wait for more economic certainty doesn’t mesh well with the U.S. political calendar. U.S. Treasury Secretary Geithner can’t delay publication of the Treasury’s currency report indefinitely. And with midterm elections approaching later this year, Congressional criticism is likely to increase.