Warren Buffett“A public opinion poll is no substitute for thought.”
Adlin Sinclair“Success is a welcomed gift for the uninhibited mind.”
Lawmakers press for action on China currency
(Reuters) – President Barack Obama faced growing congressional pressure on Monday to get tough with China over its currency practices, one day after Chinese Premier Wen Jiabao brushed off accusations that Beijing was undervaluing its currency for an unfair trade advantage.
“The impact of China’s currency manipulation on the U.S. economy cannot be overstated. Maintaining its currency at a devalued exchange rate provides a subsidy to Chinese companies and unfairly disadvantages foreign competitors,” 130 lawmakers said in a letter to U.S. Secretary Timothy Geithner and Commerce Secretary Gary Locke.
Many economists estimate China’s currency is undervalued by 25 to 40 percent, giving it a huge trade advantage by effectively subsidizing its exports and taxing its imports.
Chinese Premier Wen Jiabao on Sunday dismissed U.S. complaints about China’s exchange rate, calling them counterproductive.
He also blamed Washington for a deterioration in U.S.-China ties because of U.S. weapon sales to Taiwan and President Barack Obama’s meeting with Tibet’s spiritual leader, the Dalai Lama.
But the lawmakers’ letter showed the pressure Obama faces to push China to revalue its currency, which many U.S. lawmakers believe is to blame for lost manufacturing jobs and the huge U.S. trade deficit with China.
“If the administration fails to act on this issue it will hold back our economic recovery and hurt the ability of American small businesses and manufacturers to increase their production, keep their doors open, and create jobs,” said Representative Michael Michaud, a Maine Democrat.
The lawmakers urged the Commerce Department to make a major policy change and agree to impose “countervailing duties” on a case-by-case basis against countries that manipulate their currency for an unfair trade advantage.
The department is already considering that possibility in a case involving coated paper imports from China.
The lawmakers also demanded the Treasury Department formally label China as currency manipulator in an April 15 report on the currency practices of major trading partners.
President Barack Obama’s administration has declined to take that step in two previous reports, although Obama accused China of currency manipulation in his 2008 presidential bid.
Representative Tim Ryan, an Ohio Republican, said in the letter with other lawmakers that Obama should work with the International Monetary Fund and other countries to pressure China to revalue its currency.
If that pressure fails, they urged, the Obama administration officials should consider filing a complaint against China under the World Trade Organization.
“China continues to flout international trade laws by manipulating its currency value to increase its trade advantages. This is completely unacceptable. All that our people are asking for is a level playing field,” Ryan said.
Late last week, Senator Charles Schumer, a New York Democrat, said he planned to craft new legislation to pressure China on its currency regime.
Schumer and Senator Lindsey Graham, a South Carolina Republican, offered a bill several years ago that threatened China with a 27.5 percent across-the-board tariff if it did not allow its currency to raise in value.