U.S. Lawmakers Complain China Manipulates Yuan
STEVE INSKEEP, host:
Let's report a little more now China's currency. We've been talking about this. Critics say that China is giving its manufacturers an unfair advantage in world markets by keeping its currency artificially low in relation to other currencies, like the dollar.
New York Senator Chuck Schumer is one of a half dozen lawmakers pushing the Obama administration to push Beijing harder on the value of its currency. But up to now, the administration has resisted.
NPR's Scott Horsley reports.
SCOTT HORSLEY: If Chuck Schumer had his way, the administration wouldn't have a choice in this matter: branding China a currency manipulator would be automatic once certain objective standards were met. And there would be tough consequences - maybe tariffs - to reverse the advantage that cheap currency brings.
Senator CHARLES SCHUMER (Democrat, New York): Our message to the Chinese is simple: You start playing by the rules, or we're going to make you play by the rules.
HORSLEY: Schumer spoke yesterday at the Stainless Steel Brake Corporation outside Buffalo. It's the kind of factory that used to provide a lot of good jobs in western New York, but Schumer says those jobs have been jeopardized. China's undervalued currency makes U.S. exports less attractive and Chinese imports artificially cheap.
Sen. SCHUMER: We'll pit any of these guys against five Chinese workers. But we can't compete if, in addition to that, they slap on a 30 percent advantage.
HORSLEY: Schumer complains western New York has lost 6,000 manufacturing jobs in the last year, 35,000 in the last decade.
Sen. SCHUMER: The Bush administration did nothing about it, and now the Obama administration's doing nothing about it because they have diplomatic concerns that are higher. Well, to me, nothing is more important than jobs.
HORSLEY: Over the weekend, Treasury Secretary Timothy Geithner postponed a much-anticipated report that might've labeled China a currency manipulator.
China expert Kenneth Lieberthal of the Brookings Institution notes the administration was eager to have Chinese President Hu Jintao attend its Nuclear Security Summit next week. The administration also wants Chinese backing for U.N. sanctions against Iran. Lieberthal suggests both those goals might have been jeopardized by taking a hard line on currency.
Mr. KENNETH LIEBERTHAL (Senior Fellow, Brookings Institution): Various members of Congress have their particular priorities, and I respect that, but the president has to keep his eye on the full array of U.S. foreign policy interests and U.S. national interests.
HORSLEY: While postponing his report, the treasury secretary still made it clear that U.S. does want China to adopt a more market-based value for its currency. And the U.S. may have some allies within China, where some factions favor a stronger currency.
Nick Lardy, a senior fellow at the Peterson Institute for International Economics, says China may be more likely to adjust its currency on its own if it doesn't have to deal with U.S. threats.
Mr. NICK LARDY (Senior Fellow, Peterson Institute for International Economics): Actually, naming China as a manipulator isn't necessarily going to bring about the result that you would like, because those that are arguing for appreciation, their opponents will just say you're selling out to the foreigners. So I think the less confrontational we are, the better the chance that China will end up taking the steps in allowing its currency to appreciate.
HORSLEY: Scott Paul is not so sure. Paul heads the Alliance for American Manufacturing, a coalition of steel workers and U.S. factory owners who've long complained about China.
Mr. SCOTT PAUL (Executive director, Alliance for American Manufacturing): I don't know that soothing diplomacy is going to produce results. I think China actually respects some degree of confrontation on this.
HORSLEY: Paul suggests earlier threats from Senator Schumer and others prompted China to let its currency appreciate between 2005 and 2008. He's less confident about Secretary Geithner's plan, which involves more currency negotiation with China through April, May and June.
Mr. PAUL: If this is simply a face-saving gesture for China, then it will have been a waste of three months. If it produces meaningful change, it will be worth the wait.
HORSLEY: For the moment, Secretary Geithner and Senator Schumer may be playing a game of good cop, bad cop with the Chinese, while American factory workers wait to see who wins.
Scott Horsley, NPR News, Washington.