U.S. Chamber Opposes Romney Vow to Punish China on Currency
The U.S. Chamber of Commerce, the largest business lobbying organization, opposes Mitt Romney’s pledge to designate China as a currency manipulator if he is elected president, the group’s chief operating officer said.
“Picking fights with trading partners probably isn’t the best way to have expansion of the global trading system,” David Chavern, also the Chamber’s executive vice president, said today at a Bloomberg Government breakfast in Washington.
Competition with China, the world’s second-largest economy, has become a campaign issue as the candidates vow to protect U.S. jobs. In Ohio yesterday, Republican Romney repeated his promise to label China a manipulator on his first day in office. While the U.S. has declined to apply the designation, President Barack Obama says his administration has lodged trade complaints against China at almost twice the rate of his predecessor.
“Governor Romney shares the Chamber’s goal of expanding the global trading system,” Amanda Henneberg, spokeswoman for the Romney campaign, said in an e-mail. “But such a system will only survive, and benefit American businesses and workers, if all participants play by the rules and face serious consequences for cheating.”
China has kept the value of its currency against the dollar artificially low and should move to a market-based rate, Chavern said said. “We also have to understand that that’s going to take time,” he said.
“In terms of the China-bashing that everybody seems to love, we think has a long-term negative effect in terms of the debate,” Chavern said.
Romney’s vow also was questioned by the Business Roundtable, an association of chief executives of major U.S. companies. President John Engler, former Michigan governor, said on Aug. 28 that calling China as a manipulator is “very politically delicate,” citing sensitivities of China’s leaders. Engler, at a Bloomberg breakfast at the Republican National Convention, said he didn’t think Romney will follow through on his pledge.
Many U.S. corporations favor less confrontation as they seek access to China’s market. U.S. companies such as Apple Inc. (AAPL) and Wynn Resorts Ltd. (WYNN) make a substantial share of their sales in China, according to a Bloomberg Government analysis. Yum! Brands Inc. (YUM) runs more than 3,900 KFC and 690 Pizza Hut restaurants there. General Motors Co. (GM), including through joint ventures, sold more cars in China last year than it did in the U.S.
Allowing the yuan to appreciate would make Chinese goods more expensive for American consumers than they are now, reducing U.S. imports of the merchandise. The currency has advanced 0.7 percent against the dollar this month, the most since December 2011.
The U.S. Treasury Department determines whether nations manipulate the exchange rate between their currencies and the dollar in order to gain an unfair trading advantage. If a currency is relatively “cheap” compared with the dollar, its exports are less expensive as well, putting U.S. competitors at a disadvantage.
While China’s currency “remains significantly undervalued,” it has also gradually risen in value against the dollar since June 2010, the agency’s latest exchange rate report said in May.
The U.S. deficit for trade in goods with China was $295.4 billion in 2011, an 8.2 percent increase from the previous year, according to the U.S. Census Bureau.
Gary Locke, the U.S. ambassador to China, on Sept. 13 called on China to let the yuan appreciate against the dollar.
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