China’s currency has dropped 4.4% in the past three days.
In just three days, China’s government has wiped out four years of Yuan appreciation. This practice has cost American manufacturers and workers millions of jobs over the years.
When China devalued their currency on Tuesday, some were quick to explain this devaluation as an effort to move towards free market principles. Here at the Alliance for American Manufacturing (AAM), we strongly disagree. AAM President Scott Paul notes:
"China once again took matters into its own hands, proving the government and not market forces determine the exchange rate. This latest intervention is not the sign of an economy embracing free market principles. Quite the opposite, China is boosting its own economy at the detriment of others. Is this what we should expect from a 'responsible global actor?'”
But Tuesday wasn’t a “one-time devaluation” as Beijing officials stated and others had hoped. The yuan has fallen 4.4 percent over the past three days. The fact that the drop has continued over several days suggests that China is motivated by a need to make its exports cheaper.
Perhaps what's most disappointing is that this action follows years of the Obama administration patting China on the back for their ‘progress.’ AAM President Scott Paul adds:
"The administration has repeatedly scoffed at bipartisan efforts in Congress to include enforceable currency provisions in the TPP. As a result, we are already seeing countries in the region taking cues from China in the absence of strong U.S. leadership. When Congress returns in September, it should send strong, bipartisan currency legislation to the president as part of the pending Customs and Enforcement legislation.”
As the President said himself, now is the time for America to write the rules on trade.