WHY CONGRESS MUST PASS CHINA CURRENCY LEGISLATION NOW


Posted by SCapozzola on September 16th, 2010

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This week House and Senate committees are holding hearings to examine China’s deliberately undervalued currency.  The Alliance for American Manufacturing (AAM) supports passage of bipartisan legislation to hold China accountable for its market-distorting currency manipulation.

While the U.S.-China Business Council has called for “multilateral engagement” to address China’s undervalued currency, AAM Executive Director Scott Paul says that a decade of talk and appeasement has failed to budge Beijing.

  • Most economists say China’s currency is undervalued by as much as 40%.  Nobel Prize winning economist Paul Krugman states “China is taxing imports while subsidizing exports, feeding a huge trade surplus.”
  • On April 15, the Treasury Department delayed its semi-annual report to Congress on misaligned currencies in order to engage in additional discussions with Chinese officials.
  • Days before the G-20, on June 19, China announced a more “flexible” exchange rate policy that it would end the 18-month policy peg of the Yuan to the dollar.
  • On July 8, the Treasury Department released its long-delayed report to Congress on misaligned currencies and did not label China as a currency manipulator.
  • Three months later, the Yuan has appreciated less than one percent.  As noted by Treasury Secretary Geithner, China has done “very, very little”to allow the Yuan to appreciate in value since that announcement.
  • This week, in the face of Congressional pressure, China has allowed the Yuan to rise slightly, only further adding proof to its policy of manipulation.
  • The U.S. continues to rack up a massive bilateral trade deficit with China, reaching $145 billion for the first seven months of 2010.
  • Since 2001, more than 2.4 million American jobs have been lost due to our massive trade deficit with China.  AAM has an interactive map on its website showing job losses to China by Congressional district.

In response, AAM believes strong legislative action is needed to address China’s undervalued currency.

  • The American people strongly support action to hold China accountable for unfair trade practices:  83 percent of likely voters favor imposing tariffs on products from China unless it stops cheating.
  • AAM’s campaign to help voters contact the President and their Members of Congress has generated 30,000 letters and emails from workers, business owners, and concerned citizens urging legislative action.
  • Groups representing thousands of U.S. manufacturers, along with labor groups representing hundreds of thousands of manufacturing workers, have joined together to call for legislative action on China currency.
  • AAM has endorsed H.R. 2378, the Currency Reform for Fair Trade Act (133 co-sponsors) and S. 3134, the Currency Exchange Rate Oversight Reform Act (18 co-sponsors).
  • Claims that legislative action will somehow start a trade war are unfounded.  In 2005, the U.S. Senate passed bipartisan legislation on currency, prompting China to appreciate its currency by 21 percent until it again resumed its peg to the dollar in July 2008.

LEARN MORE: Read AAM Director Scott Paul’s latest op-ed.

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