U.S. Legislation Targets Chinese Currency Imbalance
Pressure is growing from the U.S. Congress and the Bush administration for China to do something about its pegged currency, which U.S. manufacturing industries say amounts to as much as a 40-percent subsidy for China’s exports and higher prices for U.S. goods in export markets. Since 1995, the Chinese yuan has been pegged at 8.28 yuan to the dollar. Despite long-standing calls for action by textile and other manufacturing industries, the United States has pretty much kept its hands off the issue. However, in recent weeks, President Bush said the time has come for China to take some initial steps to bring its yuan in line with other currencies.Meanwhile, members of Congress are taking a much stronger stance. The Senate has preliminarily voted on a measure that would impose a 27.5-percent surcharge on Chinese imports to the United States. Sponsors of the legislation have been promised a final Senate vote before the August congressional recess. Similar legislation is pending in the House.In addition, the House has introduced legislation that would create a definition for “exchange-rate manipulation”and set guidelines for the U.S. International Trade Commission (ITC) to follow in determining whether manipulation has occurred and its impact on U.S. industries.
July/August 2005