Trade deficit with China up; What Obama and Congress Must Do to Respond
The U.S. trade deficit with China rose again in July; the overall gap narrowed.
• The U.S. international trade deficit in goods and services decreased to $44.8 billion in July from $51.6 billion (revised) in June.
• The goods deficit with China increased from $26.7 billion in June to $27.0 billion in July.
Said Scott Paul, Executive Director of the Alliance for American Manufacturing:
trade deficit with China is growing and shows no signs of abating. But
the real question is, will Congress and the Administration do anything
about it? The trade deficit is more than a statistic. It represents
jobs, income, and know-how leaving America. And it is another bill our
children will have to pay someday.
"If China were out-competing America, I’d say we only need to focus on getting our own house in order. But the truth is, China’s gains come largely from its undervalued currency, state-owned enterprises, and heavy industrial subsidies. Shame on China for its mercantilism and protectionism, but the real shame is on us for not doing anything to stop it.
"There are concrete steps the Administration and Congress could take right now to lower this trade deficit. Congress should immediately pass the bipartisan and wildly popular Currency Reform for Fair Trade Act (H.R. 639) to counter China’s currency manipulation. The Peterson Institute on International Economics estimates that the Yuan is more undervalued today (28.5 percent) than it was a year ago (24.2 percent), so the need is even more urgent today.
"For its part, the Administration could convene a multilateral meeting to address global imbalances and in particular Chinese mercantilism. If China doesn't agree to participate, designate it a currency manipulator this October. The Obama Administration has had the opportunity to cite China for its currency peg five times, but has failed to do so each time, despite near unanimous agreement that Beijing deliberately undervalues its currency. A failure by the Administration to designate China a currency manipulator this year, given American job loss and our skyrocketing trade deficit, would be indefensible.
"Given a level playing field, our manufacturers can successfully compete and create good jobs. But the field is still dramatically tilted away from us, and towards China."
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