WASHINGTON — U.S. business and labor groups vowed Tuesday to intensify the pressure on Congress to crack down on China’s currency policies after the Bush administration declined to accuse the Chinese of currency manipulation.
Lawmakers were also critical of the Treasury Department report released Monday, which held off on designating China as a currency “manipulator” — a move that could have led to World Trade Organization export sanctions.
Congress returns from a two-week Thanksgiving recess on Monday. It is unclear whether any pending legislation targeting China’s unfair trading practices will move on an already heavy agenda before Congress adjourns for the year.
Critics of China’s fiscal policies were awaiting Treasury’s analysis at a time when the trade deficit with China is ballooning and industry job losses are mounting. Many industry trade and labor associations hoped the administration would take a more aggressive stance against China’s exchange rate system.
The administration chose to use financial diplomacy to convince China to adopt a new exchange rate system. The U.S. wants China to make more periodic adjustments to its currency and eventually let it float freely on world markets the same way Western currencies, such as the dollar and euro, do.
China made an initial move to reform its policies in July and stopped pegging the yuan to the dollar, opting to peg it to a basket of currencies, which strengthened it by 2.1 percent to 8.11 for every dollar. But many economists said at the time the move was too modest.
“I was stunned that the U.S. Treasury Department continued to look the other way in regard to China’s blatant manipulation of their currency,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition. “We have to go back to the Hill and demand a solution there because it’s clear the administration is not ready to take China on in regard to this massive economic issue.”
Critics of China’s currency policy, including U.S. textile industry executives, argue it artificially lowers the price of Chinese goods by as much as 40 percent and subsidizes exports, putting U.S. companies at a disadvantage and leading to job losses.
Cass Johnson, president of the National Council of Textile Organizations, said, “By not citing China, the administration is throwing the ball in Congress’ court.”
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Johnson said he expects Congress to take up key legislation sponsored by Sens. Charles Schumer (D., N.Y.) and Lindsey Graham (R., S.C.) early next year.
Schumer and Graham introduced legislation this year that calls for a 27.5 percent tariff on all Chinese imports if the country does not reform its currency policies by a certain time period.
The senators announced this month they had reached a deal with leaders to bring up the bill again, either in December when the Senate returns, or before March, according to Israel Klein, communications director for Schumer.
Klein would not comment on whether they would push more aggressively for a vote this year in light of the Treasury Department report.
In a statement, Graham said, “I expect in the near future, unless some dramatic change occurs, that Congress will speak loudly and forcefully on China’s continuing currency manipulation.”