After postponements and a head fake by the Chinese, the US Department of the Treasury has once again failed to name China as a currency manipulator.
You can read the Treasury Department Report to Congress here.
Here’s what Treasury Tim Geithner had to say:
“What matters is how far and how fast the renminbi appreciates…We will closely and regularly monitor the appreciation of the renminbi and will continue to work towards expanded U.S. export opportunities in China that support employment in the United States, in close consultation with Congress.”
Hey Tim, how many more years do you guys think you’ll need to closely and regularly monitor this?
|Chinese Yuans to 1 USD (invert,data)|
Chart courtesy xrates.com
When do you guys think it will be time for action? This is the same old do nothing approach we suffered through from the last administration. (PMPA has been active on this issue since 2004 when we joined the China Currency Coalition)
When was that “Change”you guys campaigned about supposed to arrive?
On the China Currency Issue, NOTHING HAS CHANGED.
We mentioned this before here, here and here.
So what can you do? Help us get Congress to do what the Administration can’t won’t.
National Currency Call-in DayInstructions. Today!
Manufacturers from all across the United States will be contacting their legislators asking them to support Senate Bill 3134 and co-sponsor House Bill 2378.
Congress needs to hear from manufacturers on this important issue, so they’ll move on legislation to provide the Administration with additional tools to prosecute illegal currency manipulators. Clearly, the Executive Branch can’t get it done.
The time to act is now.
President Obama’s soft policy toward China fails to address an even bigger menace.
To keep Chinese products artificially inexpensive on U.S. store shelves and discourage U.S. exports into China, Beijing undervalues the yuan by 40 percent. It accomplishes this by printing yuan and selling those for dollars to augment the private supply of yuan and private demand for dollars. In 2009, those purchases were about $450 billion or 10 percent of China’s GDP, and about 35 percent of its exports of goods and services.
In 2010, the trade deficit with China reduces U.S. GDP by more than $400 billion or nearly three percent. Unemployment would be falling and the U.S. economy recovering more rapidly, but for the trade imbalance with China and Beijing’s protectionist policies.
In June, China indicated it will adopt a more flexible exchange rate policy, but it has made clear Americans should not expect a dramatic change in the value of the yuan.
Simply, Beijing views its exchange rate policy as a tool for domestic economic development; but this policy imposes high, chronic unemployment on the United States and other western countries.
China recognizes President Obama is not likely to counter Chinese mercantilism with strong, effective actions; hence, it offers token gestures and cultivates political support among U.S. businesses with major investments in China.
President Obama should impose a tax on dollar-yuan conversions in an amount equal to China’s currency market intervention divided by its exports-in 2009 that was about 35 percent. For imports, at least, that would offset Chinese subsidies that harm U.S. businesses and workers.
After diplomacy has failed for both Presidents Bush and Obama, inaction amounts to appeasement and the wholesale neglect of President Obama’s obligations to create jobs for U.S. workers and avert economic calamity.
Peter Morici is a professor at the Smith School of Business, University of Maryland School, and former Chief Economist at the U.S. International Trade Commission.