The Treasury Secretary of the United States suggested that China has finally agreed that it is in their interest to adopt greater exchange rate flexibility. This is interesting mainly because the Chinese authorities have strongly opposed the statement.  They insist that there is no prediction on this issue and a timetable with regard to the yuan's revaluation is not set.

The US Senators however, voiced their confidence regarding the issue and stated that the administration will undeniably negotiate with the Chinese and they have therefore decided to delay a vote on tariffs on all imports from China.  In using this strategy they hope to achieve a win-win situation for both of the countries.

The textile issue

If Beijing fails to take the action to reset its currency, the US policymakers will go ahead with the legislation that would increase the taxes up to 27.5% on all Chinese products. This comes from widespread concensus as the low value of Yuan is boosting only the Chinese exports and squeezing all other areas of US trade. It also has resulted in over 16000 job losses in the United States which is not making anyone very happy.

At present, the Yuan is undervalued to the Dollar by as much as 40%. The scene is only getting worse; as the US threat to impose import duties on a number of goods, China has scrapped more than 80 of its export tariffs.

There are also calls for calm talks as any hasty move may put the US economy at risk.