U.S. lawmakers faulted China’s currency policy as predatory as they disagreed on the need for legislation that would punish China for keeping its currency undervalued.
Representative Tim Ryan, an Ohio Democrat and co-sponsor of legislation letting companies seek duties on Chinese imports, said China is violating trade laws and the bill would give the U.S. tools to combat undervalued currencies.
“It’s now time for our country to have the guts to stand up and take a strong stand against China’s currency manipulation,” Ryan said today in testimony to the House Ways and Means Committee. Representative Dave Camp, top Republican on the panel, said he opposes the legislation.
Differences among legislators reflect divisions among businesses and farm groups over trade with China. U.S. manufacturers and labor unions support pressing China on its currency to create jobs, while farmers and lobbyists for companies such as Caterpillar Inc. and Citigroup Inc. argue the actions may hurt business in one the fastest-growing U.S. export markets.
Legislation sponsored by Ryan and Tim Murphy, a Pennsylvania Republican, would let companies petition for higher duties on imports from China to compensate for the effect of a weak currency.
“Frustrations are high, but legislation will not help us get to the goal,” John Frisbie, president of the U.S.-China Business Council that represents companies with operations in China, said in his prepared testimony.
Treasury Secretary Timothy F. Geithner is set to testify tomorrow about China’s currency before the House panel and the Senate Banking Committee.
China’s currency, which had been pegged to the dollar before China announced a shift in policy earlier this year, today surged to its highest level since 1993.
The currency climbed 0.06 percent to 6.7422 per dollar in Shanghai, according to the China Foreign Exchange Trade System. China’s currency surged 0.8 percent in the past five days.
Forcing China to raise the value of its currency may create 500,000 jobs in the U.S., most in manufacturing at above-average wages, said C. Fred Bergsten, director of the Peterson Institute for International Economics in Washington. China’s currency policy is the most important trade issue facing the U.S., he said in testimony.
Lawmakers said the proposed measure doesn’t resolve major issues for U.S. companies in dealing with China, and might lead a crackdown on rising exports of American farm goods.
‘Obsess’ Over Yuan
Congress shouldn’t “obsess over the value of the” yuan, said Camp, a Michigan Republican. “As significant as China’s currency misalignment is, our problems with China are so much larger.”
The U.S. trade deficit with China was $145 billion from January through July, compared with $123 billion in the same period a year ago.
Representative Sander Levin, the committee chairman and a Michigan Democrat, didn’t say if he endorsed the legislation. Instead he said he would like the U.S. to file a WTO complaint over China’s currency.
The legislation is H.R. 2378 and S. 3134.