Categorized | China, Currency

Treasury Says China Is Not Currency Manipulator

Share

Reposted from Daily Media Report of the American Iron and Steel Institute

********

Treasury Says China Is Not Currency Manipulator

November 28, 2012 | DMR of AISI as seen in MarketWatch

WASHINGTON — The Treasury Department on Tuesday again declined to name China a currency manipulator, citing progress in the emerging nation’s currency appreciation.

In its semiannual report on exchange-rate policies, the Treasury said China’s currency remains “significantly undervalued,” and that “further appreciation of the [yuan] against the dollar and other major currencies is warranted.”

President Barack Obama has argued that pressure from his administration has pushed the Chinese currency higher against the dollar.

Treasury said that the yuan has appreciated by 9.7% against the dollar since June 2010 and 12.6% when adjusted for inflation.

Labeling China a “currency manipulator” would likely be more of a symbolic move, but it could have a trade impact. The designation would only trigger official talks between the United States and China over the value of the yuan.

But analysts said the key impact of the label would be to give Congress a green light to impose tariffs on Chinese imports.

Measures to slap punitive tariffs on Chinese products have long been popular in Congress, but have never cleared both chambers.

Many U.S. manufacturers argue that China has held the value of its currency artificially low in order to lower the cost of its goods in the United States.

Through September, America has run up a trade deficit in goods of $232 billion this year against China, according to Commerce Department data. That’s wider than the $217 billion trade gap through the same period of 2011.

Supporters of free trade worry that the tariffs might violate World Trade Organization rules and could prompt Beijing to retaliate, as it has done so in other trade disputes.

For this reason, a succession of U.S. administrations has argued that behind-the-scenes pressure was much more effective to get China to strengthen its currency.

In a statement, Sen. Charles Schumer, a Democrat of New York who has complained about the impact of Chinese imports on manufacturers in his state, said he was disappointed in the decision. “It’s time for the Obama administration to rip off the Band-Aid, and force China to play by the same rules as all other countries,” he said in a statement.

The value of China’s currency became a election-year issue, especially in the swing state of Ohio. Republican presidential candidate Mitt Romney had promised to cite China as a currency manipulator during his first day in office. He lost the state as well as the national election.

Obama’s campaign, in contrast, announced various trade sanctions against China and also criticized Romney’s ties to Chinese companies.

Share

Comments are closed.

Action: Sign on to 21st Century Trade Agreement Principles

Let's tell Congress how to improve trade agreements to benefit America.

Please sign your organization or company on to these 21st Century Trade Agreement Principles.

Sign up to receive periodic updates

Frequency

Ian Fletcher’s: “The Conservative Case Against Free Trade”

Ian Fletcher’s “Free Trade Doesn’t Work”