WASHINGTON, Oct 15 (Reuters) The Obama administration backed away on Friday from a showdown with Beijing over the value of China's currency that would have caused new frictions between the world's only superpower and its largest creditor.
The Treasury Department delayed a much-anticipated decision on whether to label China as a currency manipulator until after the U.S. congressional elections on Nov. 2 and a Group of 20 leaders summit in South Korea on Nov. 11.
Washington and the European Union accuse China -- set to become the world's second-largest economy after the United States this year -- of keeping the yuan artificially low to boost exports, undermining jobs and competitiveness in Western economies.
Fears are growing of a global “currency war” as major trading powers, such as the United States and Japan, seek to weaken their currencies while emerging economies such as Brazil and South Korea raise or threaten tougher controls to limit capital flows.
The decision to delay the Treasury's semi-annual currency report reflects a desire by the Obama administration to pursue diplomacy to resolve the dispute with China rather than provoke a confrontation that could potentially lead to a trade war and affect long-term interest rates.
In July, China held $847 billion in U.S. government debt. |
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