Let's be clear about something: China only responds to real action and the threat of consequences
A bipartisan group of U.S. Senators recently introduced the Currency Exchange Rate Oversight Act of 2011 to provide recourse for U.S. manufacturers adversely affected by China's ongoing currency undervaluation.
In a letter to the Senate explaining the importance of this legislation, Alliance for American Manufacturing (AAM) Executive Director Scott Paul set the record straight regarding this new legislation:
Myth: Action by Congress would not “create any incentive for China to move expeditiously to modify its exchange rate policies."
Fact: History shows that China only acts when presented with the threat of real consequences. Faced with a similar situation in 2005, the U.S. Senate acted decisively and passed bipartisan legislation introduced by Senators Charles Schumer (NY) and Lindsey Graham (SC) by a vote of 67-33. This action prompted China to steadily appreciate its currency by 21 percent until it again resumed its peg to the dollar in July 2008.
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