The lack of action to date on China's undervalued currency
For years, China has been deliberately undervaluing its currency, in violation of world trade law, in order to artifically boost exports.
According to the Wall Street Journal, 28 of 41 economists surveyed believe that China's currency, the yuan, is undervalued. Estimates for this undervaluation vary, but apparently 23 of those economists estimate that it is undervalued by more than 5%, which provides a major advantage for China's exporters.
Thankfully, most of the U.S. Congress would agree. Last fall, the Senate passed a bill to penalize countries that unfairly manipulate their currency. And currently, a majority of the House has co-sponsored a similar bill, H.R.639, "The Currency Reform for Fair Trade Act," including 64 House Republicans.
Unfortunately, House Speaker John Boehner has refused to let H.R.639 to come to the floor for a vote.
Boehner's obstruction on the bill is extremely perplexing, and one has to wonder if the Speaker and others in the GOP leadership are aware of Presidential candidate Mitt Romney's bold campaign pledge to designate China as a currency manipulator on day one of his presidency.
As Steven Dennis points out in Roll Call, Romney's stern challenge to China is an ongoing rebuke to President Obama, who has avoided citing China as a currency manipulator, despite a 2008 campaign promise to do so.
In fact says Dennis, Romney and Obama "have traded superheated barbs in the past week over who would be tougher on China's trade practices." Ironically, neither one has touted the "Senate-passed currency manipulation bill that has been sitting on the House calendar for almost a year."
That bill has languished, in large part due to the obstruction of House Speaker John Boehner (R-OH). Dennis suggests that Obama and Boehner may be in agreement on blocking the bill:
In an unusual, de facto alliance, the White House, top House Republicans and an array of powerful business interests - including the U.S. Chamber of Commerce - think launching a broad-scale assault on China's currency policies is not worth the risk of a full-blown trade war.
However, Romney has so far "not called on Boehner to put the bill up for a vote."
And so, despite the widely reported news that the Obama Administration will pursue a WTO case on subsidized auto parts from China, the currency issue seems to remain in a rhetorical limbo.
Image of the yuan by Flickr user jimmiehomeschoolmom, used following Creative Commons guidelines.
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