Senate to Vote on China Currency Manipulation Bill Monday
While China has purposely devalued it’s currency, hurting the value of the U.S. dollar over the last decade, neither the Obama or G.W. Bush administrations have actually taken the step to formally designate China as a currency manipulator in any annual reports in the past decade. Failure to designate China as a currency manipulator prevents the U. S. government from being able to apply tariffs on Chinese imports or start investigations into currency manipulation. Senate Democrats will now introduce a bill on Monday that will try to push the issue of China’s currency manipulation, and supposedly open the door for U.S. companies to seek tariffs against Chinese imports if they are found to be artificially keeping their products cheap through keeping it’s currency devalued. Considering our current recession, provoking a trade war with China is a very dangerous thing according to many political insiders, including Jon Huntsman, the former ambassador to China and current presidential candidate who told Fox news, " You take action against China, you can expect them to rebut that action with commensurate tariffs," he said. "During a recession, you don’t want a trade war."
China came right out with their opinion about this proposed bill that included a warning when Chinese foreign ministry spokesman Hong Lei last week urged US lawmakers to "reconsider their decision and refrain from pushing through the bill" and warned against "politicizing economic trade issues and resorting to trade protectionism." And in another news bulletin, the Chinese government news agency Xinhua has made its views perfectly clear, "It’s generally agreed, too, that structural problems in America rather than the Chinese currency are responsible for America’s economic difficulties….To put it simply, current anti-yuan moves in the U.S. Senate are more like a publicity attempt to attract voters and distract attention from the real problems facing the U.S. economy." (emphasis mine)
With Liberal Democrat’s policies of doing such things as not passing a budget for three years running, $1.5 trillion dollar deficits, and massive big government expansion resulting in our current recession, high unemployment and low-to-zero economic growth, Xinhua news agency’s statement does carry a good amount of weight there. Democrats are staring at the very plausible reality of losing the U.S. Senate in 2012, (along with the White House) and they look like they are making a desperate attempt to curry favor with voters with this bill.
The U.S. treasury has also refused to officially denounce China’s currency manipulation when they had the chance in May of this year in an official report, which could be part of the reason the Senate is trying to pass this bill and force China’s hand in some way. Should it backfire and start a trade war with China, U.S exporters could really be hurt, along with companies who export their products, and cause the loss of American jobs.
Considering that China has been doing this same devaluing of their currency for over a decade now, we have to wonder why Democrats didn’t make this move during their 4 straight years of iron-fisted "my way or the highway" Congressional rule of 2007-2011. Considering China’s recent statements about the U.S. Government getting their own house in order instead of trying to tell China how to run their economy, we also have to wonder if this bill isn’t simply all show and no go. (as in useless rhetoric) While some politicians are want to say this will create jobs in the U.S. while setting themselves for "working for the people" campaign slogans for the 2012 elections, there is no guarantee that the passage of this bill will actually accomplish anything. Our politicians have dug themselves into a very deep hole by letting China get away with currency manipulation for such a long time now, that China basically laughs every time we bring up supposed "tough measures" against them.
The White House has not really supported this bill, nor denounced it either. Spokesman Jay Carney did his usual Maytag high speed spin act when asked about this bill:
"We share the goal of achieving further appreciation of China’s currency. As you know, and those in the financially oriented press know, China has moved some in terms of appreciating its currency. I believe it’s appreciated about 10 percent, adjusted for inflation, since June of 2010. But it’s substantially undervalued, and we need to see continued progress, and we’ve made that clear publicly and privately."
Mr. Carney says he believes China’s currency has appreciated about 10 percent, adjusted for inflation. Would that same adjustment be like the zero-inflation statistic the Obama administration keeps throwing at Americans, while gasoline is still up 65% higher than when Obama took office, food prices are soaring, and the price of electricity is going to really put folks in a bind again this winter? If Mr. Carney and Mr. Obama have made it so clear that China needs to stop devaluing their currency, then why are they still doing it? One could draw the conclusion that while our Congress raised our debt ceiling, and therefore allowed the U.S. government to borrow another 2.5 trillion dollars this summer, maybe Barack Obama was too embarrassed to ask them to stop devaluing their currency while he was there with hat in hand asking to borrow a few trillion more from them?
It will be interesting to watch politicians from both parties stand up in Congress and tell the American people just what tireless workers they are for the people, and what miraculous numbers of jobs that will be "projected" to be created ( in 30 or 40 years) by this "courageous" legislative bill by the wizards of Congress.The very same wizards that have us fast-approaching $15 trillion dollars in debt and staring at record long-time high unemployment and foreclosure numbers. In the meantime, Barack Obama is still screaming at them to pass his fake jobs bill and this country is still running without a budget. 2012 just can not get here fast enough.