Did President Obama Push Hard Enough on Currency?
President Obama delivers the 'State of the Union' tomorrow night, and is expected to talk about job creation and reviving the American economy. The Alliance for American Manufacturing (AAM) has strongly urged the president to adopt an economic message that will press for revitalizing America's industrial base.
One key part of rebuilding U.S. manufacturing is to address our massive trade deficit with China. High on the list of concerns is Beijing's ongoing undervaluation of its currency, which gives it exporters a considerable boost.
On the subject of curency manipulation, analyst Dean Baker published an insighful op-ed in The Guardian in which he questioned whether President Obama had really pressed Chinese President Hu Jintao forcefully on the currency issue. Baker rightly observes that China is a superpower that "doesn't have to do whatever the United States wants. It makes concessions to the United States in exchange for items on its own wishlist." The question is what leverage President Obama might have had:
we know that the value of the yuan was one of the items on President Obama's wishlist, but we do not know how high up it was on the list. Did President Obama tell President Hu that he doesn't care about Microsoft and Pfizer and Wal-Mart and Goldman; he just wants to see the dollar fall against the yuan?
Or did Obama tell Hu that he would like to see the yuan rise against the dollar, but he understands the problems that this would create in China. Instead, Obama may have suggested that Hu do more to protect Pfizer's patents and swing a few more deals to Goldman.
The fact is that the public has no clue as to what the Obama administration's priorities were in negotiating with China – because the media made no effort to find out. It somehow escaped the White House press corps.
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