WASHINGTON — Despite its latest public pushback, China is expected to soon let its currency rise against the dollar, a long-sought goal of U.S. manufacturers.
For the U.S., that shift could boost exports and potentially raise the prices of imported Chinese goods. The undervalued Chinese currency has made Chinese goods cheaper for American consumers. But it has hurt U.S. companies by making their products costlier in China.
Still, any changes will likely be slow, economists say. Don’t expect to see higher prices on store shelves or large jumps in U.S. exports any time soon. The U.S. economy won’t benefit much in the short run.
A gradual increase in the value of China’s currency, the yuan, would be “a move in the right direction,” said Nariman Behravesh, chief economist at IHS Global Insight. “But it won’t be a big boost to the recovery.”
China has pegged the yuan to the dollar since 2008. U.S. manufacturers say that peg keeps China’s currency undervalued by 25 percent to 40 percent and gives the Chinese an unfair advantage.
In 2005, Beijing let the yuan gradually rise. But it resumed the peg three years later as the global financial crisis worsened.
President Barack Obama said Tuesday he thinks the yuan is undervalued. Obama said he urged President Hu Jintao, in a meeting Monday, to “move towards a more market approach.”
“It is actually in China’s interest to achieve this,” Obama said, “because over time, China’s going to have to shift away from an economy that is solely oriented” toward exports and move to an economy that emphasizes “domestic consumption and production.”
Hopes for an imminent change in China’s exchange rate had risen after a surprise stop by Treasury Secretary Timothy Geithner in Beijing last week for talks with Chinese economic officials en route back to Washington from India.
Geithner, speaking at a conference Tuesday of the American Society of News Editors, said the administration planned to be “very forceful and aggressive” in promoting changes in China’s economy that would treat American companies fairly.
“It is very important that, over time, they move to a more flexible exchange system,” he said.
