In its semi-annual report to Congress dealing with currency issues, the US Treasury Department notes Chinese currency is gradually appreciating against the dollar and other currencies, but points out there is still a “substantial undervaluation” that is creating problems in international trade.

The International Economic and Exchange Rate Policies Report notes the value of the yuan has appreciated by 18.4 percent against other currencies since July 2005, but adds that further appreciation must be accelerated. It does not recommend any specific actions except to say that in bilateral discussions and other meetings, the United States will continue to press for more rapid appreciation.

Textile and other manufacturing industries have been pressing for more forceful action by the U.S. government, including legislation that would permit use of anti-dumping and countervailing duty laws to address the problem. In a statement following the release of the Treasury Department report, Scott Paul, executive director of the Alliance for American Manufacturing, said China’s currency is about 40-percent undervalued and is a major factor contributing to the US/China trade deficit and the loss of manufacturing jobs.

May 20, 2008