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US congresswoman warns of backfire from yuan bill
Source: Xinhua |
September 16, 2010, Thursday
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Online Edition
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A chorus of critical voices gathered more strength in the United States yesterday over a bill on pressuring China to revalue its currency.
Commenting on the proposed Currency Reform for Fair Trade Act, Representative Lynn Jenkins warned at a congressional hearing that such measures would backfire on the US economy and trigger more job losses.
The Chinese market for American agricultural products has continued to expand and US agricultural exports to China have nearly doubled in the past six years, said Jenkins, whose home state Kansas is known as the "Wheat State" and relies heavily on farm exports.
China's importation of Kansas goods "not only helps farmers, also keeps the grocery stores, pharmacies, insurance agencies and service stations in business," she added.
Any action the United States might take to push China to revalue its currency must be considered "in the broader context of how it will affect the entire US economy," the congresswoman stressed.
China is currently the third largest export market for the United States, and economists believe that the two economies are closely inter-connected.
Yet with the US unemployment rate hovering at 10 percent and congressional elections approaching, some US industry leaders and congressmen have recently ratcheted up pressure on Beijing, urging China to steeply revalue its currency.
Lashing out at allegations that such a move would help US save more jobs, Jenkins said many proposals beyond reducing federal deficits could actually "hamper agriculture markets, raise prices for US manufacturers and further threaten US jobs."
Meanwhile, most trade lawyers believe that addressing the exchange rate with countervailing duties would violate the World Trade Organization rules, said John Frisbie, president of the US-China Business Council.
"China's exchange rate appreciated nearly 20 percent between 2005 and 2008, but the US trade deficit with China grew during this time," he told the hearing.
In July, China announced a plan to further proceed with its reform of the yuan exchange rate regime to enhance the exchange rate flexibility.
"We often hear the claim that trade with China has cost 2.4 million US jobs. This claim is based on the faulty premise that everything we import from China would be made in the United States otherwise. That's clearly an erroneous assumption and undermines the credibility of the number," Frisbie added.
The critical remarks came one day after 36 major US business organizations, including the American Chamber of Commerce in China and the Business Roundtable, called for the exclusion of the proposed bill.
"We strongly oppose legislation that would allow the use of either the anti-dumping or countervailing duty law to address currency concerns," they said in a joint letter.
The letter was addressed to Sander Levin, chairman of the House of Representatives Ways and Means Committee, whose panel called the ongoing two-day hearing.
Calman Cohen, president of the US Emergency Committee For American Trade (ECAT), said that on behalf of the members of the ECAT, he expressed "strong opposition" to the proposal.
The bill will lead to "fewer opportunities for US exports and sales into China's market", said Cohen, adding that US exports to China had quadrupled since 2000, making China the fastest-growing export market for the United States.
The ECAT's members represent a broad array of sectors in the US economy, including agriculture, finance, high technology, manufacturing, publishing and among others.
Commenting on the proposed Currency Reform for Fair Trade Act, Representative Lynn Jenkins warned at a congressional hearing that such measures would backfire on the US economy and trigger more job losses.
The Chinese market for American agricultural products has continued to expand and US agricultural exports to China have nearly doubled in the past six years, said Jenkins, whose home state Kansas is known as the "Wheat State" and relies heavily on farm exports.
China's importation of Kansas goods "not only helps farmers, also keeps the grocery stores, pharmacies, insurance agencies and service stations in business," she added.
Any action the United States might take to push China to revalue its currency must be considered "in the broader context of how it will affect the entire US economy," the congresswoman stressed.
China is currently the third largest export market for the United States, and economists believe that the two economies are closely inter-connected.
Yet with the US unemployment rate hovering at 10 percent and congressional elections approaching, some US industry leaders and congressmen have recently ratcheted up pressure on Beijing, urging China to steeply revalue its currency.
Lashing out at allegations that such a move would help US save more jobs, Jenkins said many proposals beyond reducing federal deficits could actually "hamper agriculture markets, raise prices for US manufacturers and further threaten US jobs."
Meanwhile, most trade lawyers believe that addressing the exchange rate with countervailing duties would violate the World Trade Organization rules, said John Frisbie, president of the US-China Business Council.
"China's exchange rate appreciated nearly 20 percent between 2005 and 2008, but the US trade deficit with China grew during this time," he told the hearing.
In July, China announced a plan to further proceed with its reform of the yuan exchange rate regime to enhance the exchange rate flexibility.
"We often hear the claim that trade with China has cost 2.4 million US jobs. This claim is based on the faulty premise that everything we import from China would be made in the United States otherwise. That's clearly an erroneous assumption and undermines the credibility of the number," Frisbie added.
The critical remarks came one day after 36 major US business organizations, including the American Chamber of Commerce in China and the Business Roundtable, called for the exclusion of the proposed bill.
"We strongly oppose legislation that would allow the use of either the anti-dumping or countervailing duty law to address currency concerns," they said in a joint letter.
The letter was addressed to Sander Levin, chairman of the House of Representatives Ways and Means Committee, whose panel called the ongoing two-day hearing.
Calman Cohen, president of the US Emergency Committee For American Trade (ECAT), said that on behalf of the members of the ECAT, he expressed "strong opposition" to the proposal.
The bill will lead to "fewer opportunities for US exports and sales into China's market", said Cohen, adding that US exports to China had quadrupled since 2000, making China the fastest-growing export market for the United States.
The ECAT's members represent a broad array of sectors in the US economy, including agriculture, finance, high technology, manufacturing, publishing and among others.
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