Treasury Says China Is Not A Currency Manipulator
James A. Morrissey, Washington Correspondent
In the wake of the U.S. Treasury Department's decision not to cite China as a currency manipulator,
manufacturers and members of Congress who believe China's currency practices amount to an illegal
subsidy for its exports have renewed their calls for legislation to address the issue.
On July 6, the Treasury Department sent Congress its Semiannual Report on International Economic and Exchange Rate Policies, which concluded that China is making progress toward revaluating its currency by no longer linking the value of its renminbi to the dollar. While admitting the renminbi is undervalued, the report said the new policy announced June 19 is a "significant step" toward allowing the exchange rate to appreciate in response to market forces.
"What matters now is how far and how fast the renminbi appreciates," Treasury Secretary Timothy Geithner said. "We will closely and regularly monitor the appreciation of the renminbi and will continue to work towards expanding U.S. export opportunities in China."
The Alliance for American Manufacturing's Executive Director Scott Paul said China's announced plan to free up its currency is "nothing more than a charade," and "the administration has fallen for this rather unbelievable promise."
While U.S. manufacturers contend that the renminbi is undervalued by as much as 40 percent, the Associated Press estimates the value of the renminbi has appreciated by only about 0.8 percent since the June announcement.
Sen. Chuck Schumer, D-N.Y., who is sponsoring legislation that would impose stiff penalties on countries that manipulate their currencies, said: "This report is as disappointing as it is surprising. It makes it clear it will take an act of Congress to do the obvious and call China out for its currency manipulation."
The Fair Currency Coalition, which includes a number of textile members, also called for legislation to address what it says is a continuing problem that is costing thousands of U.S. jobs. The coalition pointed out that the U.S. Constitution empowers Congress to regulate foreign trade, and Congress has delegated to the Commerce Department authority to enforce trade laws, and added, "Inaction by these decisive players on the China currency is no longer an option."
A statement released by the coalition said, "It is time for Congress and the Obama Administration to stop waiting for each other to act and start working together to halt China's job-destroying persistent undervaluation of the renminbi that is so damaging to the U.S. economy."
July 13, 2010