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CHINA CURRENCY COALITION WASHINGTON, D.C.
FOR IMMEDIATE RELEASE
Contact: Skip Hartquist 202.342.8450
dhartquist@kelleydrye.com
Angela Brown 202.342.8644
angela.brown@sightlinemarketing.com
China Currency Coalition Responds to Administration's
"Go-Slow" Policy and Urges Congress to Pass Ryan-Hunter Bill (H.R. 2942)
to Counter Currency Undervaluation by China
(Washington, D.C.) (February 4, 2008) – The China Currency Coalition today expressed its disappointment and frustration with the continuation of the Administration’s failed policy towards China’s heavily subsidized currency. Separate statements by Treasury Under Secretary for International Affairs, David H. McCormick, and Commerce Under Secretary for International Trade, Christopher A. Padilla, indicate that the Administration will continue its longstanding and fruitless approach of engaging in intensive dialogue with China and will not work with Congress to pass pending legislation that would address both the trade and monetary aspects of China’s mercantilist misalignment and manipulation of the yuan.
“These recent Administration statements underscore the need for Congress to take immediate action to remedy the adverse effects of China’s undervaluation of its currency on U.S. manufacturing, agriculture, services, and employment,” commented Richard L. Trumka, co-chair of the coalition and AFL-CIO Secretary-Treasurer. “Now is the time to take action that will stem the tide of lost jobs and lost manufacturing opportunities for U.S.-based companies.”
China’s undervalued yuan is a massive subsidy for its exports to the United States, a tax on U.S. exports to China, and a subsidy for U.S. firms that move their production facilities to China. In short, the United States loses on every count – lost exports, lost markets in the United States, and lost job opportunities in the United States. Further, despite assertions of a 15-percent appreciation of the yuan, the International Monetary Fund’s financial statistics demonstrate that China’s currency has appreciated only 3.6 percent in real terms since 2002.
China’s subsidized currency continues to destabilize the global financial system. The undervalued yuan has caused China’s foreign exchange reserves to balloon to over $1.5 trillion as of the end of 2007, the highest level of any country and far surpassing the foreign exchange reserves of Japan, which previously held that distinction. These increases in foreign exchange reserves have caused the Chinese economy to overheat, fueling its exports to the United States and other countries, and creating a financial bubble that threatens the global financial system.
Furthermore, China’s current account surplus has expanded to levels never reached by any other major country. China’s unprecedented current account surplus now totals about 11 percent of its GDP, considerably above the level of 4 percent that Japan reached in the 1980s.
“Congress can and must play a critical role in helping to restore financial stability,” observed Doug Bartlett, co-chair of the coalition, owner of Bartlett Manufacturing Company, Inc., in Cary, Illinois, and Chairman of the U.S. Business and Industry Council. “First, passage of the Ryan- Hunter bill, H.R. 2942, will allow domestic firms to defend themselves against these egregious policies through trade remedies. Congressional action also will help to stem the tide of lost jobs and appropriately put China on notice that the United States is not prepared to sacrifice its own economy for China’s benefit. Passage of this legislation will demonstrate that Congress can act firmly to establish a balanced trade relationship, not one based on unfair trade practices.”
David A. Hartquist is Senior Partner and Chairman of the International Trade Practice Group at Kelley Drye Collier Shannon in Washington, D.C.
The China Currency Coalition is an alliance of industry, agriculture, services, and worker organizations whose mission is to support U.S. manufacturing and production by seeking an end to Chinese currency undervaluation. Additional information on the coalition can be found on its Web site: www.chinacurrencycoalition.org.
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