Pragmatism trumps temptation to lecture over yuan

From the perspective of Washington, the China tea leaves are suddenly looking less ominous.

Beijing has agreed to sit down for serious discussions on new Iran sanctions and to attend a global summit on nuclear security in Washington.

It was barely a surprise, therefore, when the United States Treasury Secretary, Timothy Geithner, let drop that the planned release of a report on China's management of its currency, the yuan - which had been due on April 15, two days after President Hu Jintao's visit to the US capital - would be postponed for several months.

Some in Congress had expected that the report would name China a "currency manipulator".

China, a holder of so much of America's debt, is a key partner in global diplomatic and economic affairs. And right now there is precisely that small question of Iran.

China is one of five nations on the UN Security Council with a veto. Without its support, new sanctions cannot happen.

The US, like most other countries, wants more than ever to persuade China to revisit its currency policy.

The yuan is pegged to the dollar at a rate that, by some estimates, devalues it by as much as 40 per cent, giving a huge advantage to Chinese exporters.

No one at the White House wants to admit that the delaying of the release of the Treasury's report and the start in New York this week of high-level talks on sanctions on Iran are linked.

Perish the thought. Larry Summers, Obama's top economic advisor, even went on television to deny that such a thought had entered anyone's head.

The line, instead, is that there are lots of financial meetings this year where the currency issue can be discussed.

The question is, will it pay off? It may be good news that China wants to join talks on sanctions, but expect to see its diplomats pushing hard if not to block sanctions then to water them down.

It is not just that China has long been averse to sanctions of all kinds. It, too, has reasons for pragmatism.

Who supplies more than one-tenth of all of China's energy needs? The Iranians.

- INDEPENDENT