U.S. Secretary of State John Kerry and U.S. Treasury Secretary Jack Lew, with six Treasury officials, have finished the first day in Beijing for the sixth Strategic and Economic Dialogue with China.
China’s weak currency should be at top of the agenda, and it seems it has received a lot of attention in Beijing and in Washington. House Ways and Means Committee Chairman Dave Camp (R-MI), and Senate Finance Committee Chairman Ron Wyden (D-OR), along with ranking members Sander Levin (D-MI) and Orrin Hatch (R-UT), sent a letter to the Obama Administration ahead of the dialogue:
China’s continued currency misalignment is unsustainable and unacceptable. China must move more rapidly towards allowing the renminbi exchange rate to be set by market forces. China must also accelerate financial sector and other structural reforms. Without taking these actions, China will be unable to rebalance its economy and U.S. workers and companies will continue to be harmed.
Senators Bob Casey (D-PA) and Chuck Schumer (D-NY) also urged action on China’s currency manipulation highlighting China’s reversed progress on the issue:
Just last year, the Administration praised China’s commitment to addressing currency undervaluation following the S&ED. However, Treasury’s most recent Report to Congress on International Economic and Exchange Rate Policies clearly states that progress made in 2013 towards appreciation was reversed in the early months of 2014 as the yuan depreciated by “marked” 2.68 percent. It appears we take one step forward, only to take two backwards.
The Alliance for American Manufacturing (AAM) has repeatedly urged the Obama administration to get tough on China’s currency manipulation — a practice that the country has promised to eliminate, but failed to take action to do so. Said AAM President Scott Paul:
Since this dialogue got underway, our annual goods trade deficit with China has grown to a record $318 billion. More recently, China has slowed the pace of yuan appreciation. For a currency pegged to political pressure, that’s a telling sign. Any trade or investment barrier that China promises to eliminate is simply replaced by another one. For U.S. negotiators, it’s like playing an unwinnable game of Whack-A-Mole.
This trip to Beijing is an opportunity for the administration to “show some teeth.” It should be noted that the Treasury Department under President Obama has passed on 11 opportunities to name China a currency manipulator. The Treasury Department, in fact, hasn’t named China a currency manipulator in its semi-annual report since 1994.
But a weighted currency hurts American exports and the workers who make them. As Senators Sherrod Brown (D-OH) and Jeff Sessions (R-AL) and even a U.S. Treasury official have said: how China implements its [currency] reforms will matter greatly to the United States and the ability of our businesses and workers to compete on a level playing field.