NPR logo

Businesses Await U.S. Report on Chinese Currency

  • Download
  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
Businesses Await U.S. Report on Chinese Currency


Businesses Await U.S. Report on Chinese Currency

Businesses Await U.S. Report on Chinese Currency

  • Download
  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

The Treasury Department prepares to issue its semi-annual report that identifies countries involved in manipulating the value of their currencies. The focus this time around is on China, which is accused by many of keeping the value of the yuan artificially low.


Our business report, today, begins with questions about China's currency.

The Treasury Department this week is scheduled to release a report that could significantly affect the U.S. relationship with China. By law, the department must publicly announce if any country manipulates its currency.

These days, the focus in on one country: China.

NPR's Adam Davidson reports.

ADAM DAVIDSON reporting:

A government report on currency exchange rates? How could that be a big deal?

Mr. BRAD SETSER (Economist, Roubini Global Economics Monitor): It's big. There's no of getting around it. It's big.

DAVIDSON: Economist Brad Setser might not sound that excited, but this is about as dramatic as economists get.

He's at Roubini Global Economic Monitor. He says this report will spur currency traders to move billions of dollars in Euros and Yen; and no matter what the decision is, there are going to be people who don't like it.

Mr. SETSER: There is no option that is a clear winner.

DAVIDSON: There is little question about this in the U.S. Pretty much every economist, policy watcher, or politician, agrees that China manages its currency and prevents its value from rising. But this treasury announcement isn't about what the experts think--it's about politics, Setser says.

It's a big deal this year, because many domestic manufacturers and labor groups say China's currency manipulation is costing them money and jobs. But that's not the only pressure on Tim Adams, the Treasury Undersecretary of International Affairs, who is in charge of writing the report. Brad Setser.

Mr. SETSER: Most of corporate America would much rather Tim Adams does not declare China to be manipulating its currency.

DAVIDSON: Retailers who sell cheap things made in China want treasury to go easy. So do big American manufacturers, because they make things in China. For his part, Tim Adams is afraid short-term politics could hurt our relationship with the Chinese. It's a relationship, he says, that's not perfect, but works well.

Under Secretary TIM ADAMS (Undersecretary of International Affairs, United States Treasury Department): We could screw it up. And we could screw it up in a variety of ways.

DAVIDSON: Adams has used quiet, behind the scenes diplomacy, carefully calibrating respect and insistence.

Under Secretary ADAMS: They have the right to choose whatever exchange rate system or regime they want. But they don't have the right to engage in managing that in a way that is disruptive or distortionary to the global system.

DAVIDSON: Adams is well respected by Republicans and Democrats for this carefully honed approach. This report he has to write is not helping, many say. He's forced to choose from two bad options. He can publicly attack China and say they are manipulating their currency; China's government will not like it. They could react angrily and cut off negotiations. On the other hand, Adams could choose to deny what almost all economists and policy makers in the U.S. see as the obvious truth. There could be a backlash.

Adams won't come out and say he wishes he didn't have to release this report. But he comes close. He says the law mandating the report was passed in 1988.

Mr. ADAMS: And sometimes I wonder if we're thinking about it and evaluating the issues contained in this report through the lens that is 20 years old, and we really ought to be thinking about these issues in a manner that's more forward-looking.

DAVIDSON: Adams might not like the law, but he does have to follow it. And one day, very soon, he'll have to issue this report and accuse the Chinese of manipulating their currency; or, he'll just give them a pass.

Adam Davidson, NPR News.

Copyright © 2006 NPR. All rights reserved. Visit our website terms of use and permissions pages at for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.