Senate Foreign Relations Committee Chairman John Kerry said the U.S. Congress is “impatient” with the artificially low value of China’s yuan and may take action next year.
The Massachusetts Democrat, speaking in Washington about U.S.-China relations, also said that if the Group of 20 nations isn’t able to address currency values, the U.S. should find another way to deal with the issue.
“The United States Congress is getting increasingly impatient and in the next session may take matters into its own hands,” Kerry said, noting that the value of the yuan contributes to the U.S. trade deficit. “If the G-20 can’t deal with this problem, then we ought to look at other multilateral tools, ones with teeth, that can fix this.”
Kerry’s comments to the Center for American Progress, a think tank with ties to the Obama administration, came as the U.S.-China Joint Commission on Commerce and Trade prepares to meet next week. In a Bloomberg News interview today, Commerce Secretary Gary Locke described the gathering as “so very important.”
The yuan “certainly affects the ability of U.S. companies to be competitive when Chinese goods come in,” Locke said.
Treasury Secretary Timothy Geithner and President Barack Obama have pressed high-level Chinese officials numerous times to allow the yuan to appreciate faster, Locke said.
In India in November, Geithner urged China to continue letting the yuan rise, saying it was in the country’s interest to have a market-determined exchange rate that allows it more control over monetary policy.
“We relay these concerns of members of Congress, and the American people and the administration to our Chinese counterparts, and we continue to press ahead on these trade issues,” Locke said.
As the executive branch has tried to exert pressure on China to change, Congress has been weighing legislation that would allow companies to seek trade remedies if they are affected by an unfairly undervalued currency.
China amassed a $201 billion trade surplus with the U.S. for the first nine months of this year, more than the U.S. deficit with the next seven largest trading partners combined, according to the Commerce Department.
Locke said that U.S. officials at the joint commission meeting would focus on breaking down barriers to U.S. products and services entering China, including pharmaceuticals, medical equipment and clean energy.
The U.S. will also raise the matter of Chinese procurement practices, including Beijing’s “indigenous innovation” policy, “that really favor their own industries and their own companies to the exclusion of foreign companies,” Locke said.
Thirty U.S. senators sent a letter yesterday to Vice Premier Wang Qishan saying they want China to allow “its currency to appreciate meaningfully” before President Hu Jintao visits Washington next month.
The lawmakers also urged Wang to deal with U.S. concerns about trade in green-energy goods, beef and protection of copyrighted items at the joint commission meeting.
Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics in Washington, said he didn’t expect lawmakers to focus on the yuan during the current lame-duck session.
‘Back With a Roar’
Hufbauer said in a telephone interview that when the next session of Congress convenes in January, he expects the yuan issue to come back “with a roar.”
Lawmakers in both parties will likely support a bill pushing China to let the value of the yuan rise, he said.
“I regard that as only the first installment unless there’s a fairly major shift in the Chinese currency policy,” Hufbauer said.
Lawmakers considering sanctions against China will need to weigh the impact on shoppers accustomed to buying inexpensive Chinese-made goods, said Carl Weinberg, chief economist of High Frequency Economics in Valhalla, New York.
“A tariff on imports or goods from China is really a tax on American consumers,” Weinberg said in a telephone interview. “You’re making things more expensive for the American consumer. That’s something that no Congress undertakes lightly.”