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  • China Must Play Fair on Trade

    Senator urges Bush to convene summit on China yuan
    Wed Jun 8, 2005 11:57 AM ET

    WASHINGTON (Reuters) - President Bush should call a summit of congressional leaders and top administration officials to discuss what steps the United States should take to push China to revalue its currency, a prominent U.S. Senator said on Wednesday.

    Sen. Charles Schumer, a New York Democrat, said Chinese leaders needed to outline a timetable for moving to a freely floating currency and begin taking tangible steps toward that goal if they want to avoid the U.S. Congress passing legislation pressuring them to act, he said.

    Schumer is co-author of a bill that would threaten China with a 27.5 percent across-the-board tariff on U.S. imports of Chinese goods if it does not revalue its currency, the yuan.

    That measure attracted 67 votes in the Senate this year before it was withdrawn. Schumer and Sen. Lindsey Graham, a South Carolina Republican, have been promised a second vote on the bill before the end of July.

    In remarks at the Council on Foreign Relations, Schumer claimed growing support for his bill but said he was flexible on the approach the United States would take to pressure China as long as that produces tangible results in the near term and a concrete timeframe to move to a freely floating currency.

    Schumer shrugged off charges that his bill was a protectionist measure, noting that it would allow the White House to delay imposing tariffs for up to two years if China was taking steps toward floating the yuan.

    "Our bill is not intended to erect a wall, it's intended to get China to play fair, once and for all," Schumer said.

    He called remarks on Tuesday by Rep. Bill Thomas, chairman of the House Ways and Means Committee, "an amazing shot in the arm" for prospects of congressional action on China.

    Thomas acknowledged that Congress might have to formally go on record regarding the yuan in order to help get votes for a U.S. free trade agreement with Central America.

    Concern about the huge U.S. trade deficit with China, which many lawmakers blame on Beijing's practice of pegging its currency at around 8.28 yuan to the dollar, has contributed to a difficult environment in Congress for the U.S.-Central American Free Trade Agreement, or CAFTA.

    "The president ought to call a little summit and get some of the leaders ... of the House and the Senate together and figure out where to go next" on the yuan issue, Schumer said.

    A spokesman for the Treasury Department, the lead agency on currency matters, was not immediately available for comment.

    Schumer repeated his contention that the Bush administration was quietly backing his efforts to pressure China on the yuan. He said he had been told by at least five high-level Bush administration officials to "keep this up because you're the only thing we've got going for us."

    China hit back on Wednesday at pressure to reform its currency, with a top central banker saying in Frankfurt it was unfair to make developing countries do most of the work on resolving global imbalances.

    Peoples Bank of China Assistant Governor Ma Delun said China did intend to let its currency move more freely, but was preparing for the reforms at its own pace, and he lashed out at what he called politically motivated pressure.

    U.S. manufacturers say the yuan is undervalued by as much as 40 percent, giving China an unfair export advantage.

    In a speech to an IMF-Bundesbank conference, Ma said China and other developing Asian countries had paid the price of exchange rate fluctuations in the world's major reserve currencies -- the dollar and now the euro.

    http://www.reuters.com/newsArticle.j...4&pageNumber=1

    This the first time in a while I've agreed with a Dem.

  • #2
    Even if China revalues the yuan, there will still be manufacturers outside of China that can make the same products cheaper, so for the most part, we will still end up importing the items, just at a higher cost and lower quantity. I'm not sure how that benefits us. Besides, the internal pressures on the yuan to keep its peg will force China to revalue in the near future anyways.
    "So little pains do the vulgar take in the investigation of truth, accepting readily the first story that comes to hand." Thucydides 1.20.3

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