NEW YORK (CNNMoney.com) -- A Treasury report on foreign exchange rates has lawmakers in a tizzy about China's cheap currency.
In its latest report to Congress following China's decision to end its peg to the dollar, the U.S. Treasury said that while the People's Republic did not "manipulate" its currency, the yuan is still "undervalued."
The semi-annual document reports on whether countries manipulated their exchange rates to gain an unfair advantage in international trade. The most recent edition covers the second half of 2009 and part of 2010, and during that time, no countries, including China, manipulated their currencies, the Treasury said.
The report follows just a few weeks after China decided to let the yuan fluctuate more flexibly with market-based exchange rates. The move undid a controversial policy that kept the yuan pegged to the dollar since 2008, keeping it artificially low during the worst of the financial crisis and making it tougher for U.S. companies to compete with Chinese manufacturers.
Following the Treasury's report, Sen. Chuck Grassley, R-Iowa issued a public statement criticizing Geithner for releasing the report more than two months late and once again not identifying China as a "manipulator."
"Everyone knows China manipulates its currency," Grassley said. "If the President continues to avoid acknowledging China's currency manipulation and fails to address it in a meaningful way, Congress will have to act."
Grassley also called for a formal case against China through the World Trade Organization.
Sen. Chris Dodd, D-Conn., also issued a statement that, while not as aggressive as Grassley's, promised to follow up on the report with further action, including a hearing with Treasury Secretary Tim Geithner.
"For years, American workers have not been able to compete on a level playing field because of China's undervalued currency and now they are struggling to secure jobs in the midst of a painful economic crisis," Dodd said.
Geithner was one of the most ardent proponents among various international leaders calling for the Chinese to allow their currency to float freely. In a previous report released in October, the Treasury criticized China for its "lack of flexibility" on exchange rates but didn't brand the country a manipulator.
What matters now, Geithner said in a statement Thursday, is "how far and how fast" the yuan appreciates.
"We will closely and regularly monitor the appreciation of the renminbi and will continue to work towards expanded U.S. export opportunities in China that support employment in the United States, in close consultation with Congress," he said.
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