Clever timing and irony when it comes to China's currency manipulation.
The U.S. Treasury Department released its semi-annual report on currency this past Friday. And, since the report once again failed to cite China for its egregious currency manipulation, Treasury wisely released the report late on Friday, in order to help bury it in the weekend news.
The Alliance for American Manufacturing (AAM) didn't miss the story, though, and issued a statement lamenting Treasury's ongoing inaction.
Associated Press reporter Martin Crutsinger picked up on AAM's disappointment, and quoted Scott Paul on the lack of committed U.S. effort to deal with the opportunistic currency moves of both China and Japan:
U.S. manufacturers have long contended that China is manipulating its currency to gain trade advantages and have recently stepped up their criticism of Japan’s policies. A weaker Chinese renminbi and a weaker Japanese yen make goods from those two countries cheaper for American consumers and U.S. goods more expensive in those foreign markets.
“The Alliance for American Manufacturing continues to believe that countries like China and Japan will only take the U.S. government seriously if words are backed by action,” said Scott Paul, president of the trade group. He called on Congress to pass pending legislation that would toughen economic sanctions on countries that manipulate their currencies for trade purposes.
After the disappointment of the Treasury report, however, came even more frustrating news. Over the weekend, the Chinese Yuan appreciated slightly, according to the South China Morning Post, reaching a "a record high" against the U.S. dollar.
Such a move should be welcomed as good news, right?
Actually, the move:
[a] represents just a very small, incremental amount (6.2506 Yuan per U.S. dollar, up from 6.2578)
[b] is politically motivated-- timed to happen just ahead of a visit to Asia by U.S. Secretary of State John Kerry.
In fact, the Yuan is still significantly undervalued, relative to the U.S. dollar.
But just as troubling is the issue of Beijing's astute manipulation of a gullible U.S. government. As AAM has documented, the Yuan is cleverly pegged to political pressure. What happens, time and again, is that ahead of a U.S.-China summit, a G-20 meeting, or potential Congressional focus, Beijing suddenly budges the Yuan just a tiny amount. It's a token gesture, and represents only a fraction of the full currency appreciation that's needed. But it's enough to throw pundits, politicians, and lawmakers into a tizzy. Essentially, it's a smoke screen that enables China apologists and others to say, "Oh, look, China is finally halting its illegal currency manipulation."
No such luck, however. As Paul very wisely observed in his above-mentioned quote to the Associated Press, China won't make any real effort unless it is strongly held to account.
That's why attention must now pass to Congress, where a new currency bill sits, slowly collecting co-sponsors. Hopefully Congress will finally succeed where the Treasury Department has consistently failed.
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