Congress acts on undervalued Yuan
TEXT OF STORY
Kai Ryssdal: The list of things Congress isn’t pleased with China about is fairly short. There’s the trade gap and the Chinese currency. Treasury Secretary Paulson has been in China the past couple of days trying to deal with both of those issues.
It’s very much the old story of being between a rock and a hard place — trying to negotiate with Beijing and appease U.S. lawmakers at the same time. Congress is demanding Beijing let the yuan rise in value, and so give American exporters a break.
Before Paulson got on his plane home today, he admitted he didn’t get very far. And not too much later back in Washington, Congress took China’s currency into its own hands. Marketplace’s Jill Barshay reports now from New York.
Jill Barshay: The Senate Banking Committee this morning passed a bill that would make it easier to slap the label “Currency Manipulator” on the Chinese government.
Richard Shelby of Alabama is the top Republican senator on the panel. He says he co-wrote the bill, and voted for it because he wants the administration to be more aggressive in punishing China or any other nation that undervalues its currency.
Richard Shelby: Congress has been reported to by the administration for a number of years, they say we didn’t find any manipulation and we didn’t do this. Well, it’s hard for us to believe.
Every year, the Bush Administration says China didn’t mean to undervalue its currency. But the bill passed today says intent doesn’t matter anymore. China can be called a currency manipulator anyway.
The Bush Administration hates this legislation and other China currency bills floating around Congress. Secretary Paulson wrote a letter to Congress yesterday warning that these bills could trigger retaliation and a global cycle of protectionist legislation.
Trevor Houser is an analyst with China Strategic Advisory. He says this banking bill that passed today probably wouldn’t be as bad as the Bush Administration fears — although it could call for taking China to the World Trade Organization, or WTO.
Trevor Houser: Basically it just ratchets up the pressure on the Treasury Department. And it includes some instructions for the Treasury Department to pursue WTO action. But basically, the ball is still in the Treasury Department’s court.
Houser says China doesn’t like to be told what to do by others. He expects China will eventually increase the value of its currency to combat inflation all on its own.
In New York, I’m Jill Barshay for Marketplace.
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