In April Treasury Secretary Geithner sidestepped an official declaration that China is manipulating its currency by acknowledging that China “pegs” its currency and that this is harming the world-s economy, but put off a formal declaration of currency manipulation.
Today Geithner officially declined to label China a currency manipulator. According to a Wall Street Journal report, “He pledged to “closely and regularly monitor” the currency’s appreciation and consult with Congress in ongoing efforts to expand U.S. exports to China.” The report continues,
The Treasury’s decision once again to decline to declare formally that China is manipulating its currency is certain to further anger members of Congress, who happen to be on recess this week.
. . . A bipartisan group of senators has introduced a bill that would lower the hurdle for taking action against China, requiring only that an exchange rate is misaligned instead of having to determine that a country is intentionally manipulating the currency. It also lays out a series of escalating punitive actions, including countervailing duties and prohibiting access to U.S. government contracts.
“Undervalued.” According to BusinessWeek,
The U.S., stopping short of branding China a currency manipulator, said the yuan “remains undervalued” after the nation ended its peg to the dollar.
China took a “significant step” last month when it began to allow markets to drive the currency higher, the Treasury said in a report to Congress released today. The report, initially due April 15, also said it’s not yet clear whether the policy shift will correct the yuan’s undervaluation.
Alliance for American Manufacturing (AAM) Executive Director Scott Paul said of the announcement,
“Claiming China doesn’t manipulate its currency makes about as much sense as saying LeBron James doesn’t play basketball.
“It’s clear that China’s announcement before the G-20 last month was nothing more than a charade, but the Administration seems to have fallen for this rather unbelievable promise.
“Congress must pass strong legislation to address China’s currency manipulation so that America’s workers and businesses can compete on a level playing field.
“We will never double exports unless we stop China’s cheating.
“This is a step backward.”
“Up to Congress to act.”
Senator Chuck Schumer said the decision means it is up to Congress to act,
This report is as disappointing as it is unsurprising. It’s clear it will take an act of Congress to do the obvious and call China out for its currency manipulation,” Senator Charles Schumer, a New York Democrat, said in a statement.