–Visit Of President Hu Is Likely To Leave China Critics Displeased
–Key Republican Lawmaker Remains Very Cool To China Currency Bill
–Rep. Camp: U.S. Has Larger Issues With China Than Currency
By John Shaw
WASHINGTON (MNI) – It seems very likely that Chinese president Hu
Jintao’s visit to Washington next week will intensify rather than mute
congressional criticism of China’s economic policies.
In various fora, Hu is likely to describe the various currency
reforms that China has instituted.
But with a new Congress beginning work, his comments will almost
certainly be viewed skeptically by lawmakers. And it seems certain that
legislation will be introduced in the coming months to sanction China
for economic policies, especially currency policies, that American
policymakers see as unfair and even illegal.
Treasury Secretary Tim Geithner’s currency-related comments
Wednesday at the Johns Hopkins School of Advanced International Studies
are broadly shared by many in Congress.
Geithner said the yuan is “substantially undervalued” against the
dollar.
“China’s exchange rate needs to strengthen in response to market
forces,” he said.
The road to actual congressional passage of a currency bill in a
form that is acceptable to President Obama is long and difficult.
The Obama administration, like its recent predecessors, is willing
to let Congress play the cantankerous and threatening “bad cop” while it
tries to quietly negotiate currency reforms with China in both bilateral
and multilateral venues.
Additionally, the new chairman of the powerful and pivotal House
Ways and Means Committee has been consistently skeptical about currency
bills as a way of handling the U.S.’s economic disagreements with China.
Rep. David Camp, the new chairman of the House Ways and Means
Committee, has been a tough critic of China’s economic policies, but has
been decidedly cool to focusing on currency legislation.
While Camp was one of 99 House Republicans who voted for a bill
last fall that would have given the Commerce Department the authority to
impose duties on products deemed to be unfairly subsidized by China’s
currency policy, he did so reluctantly and with clearly articulated
skepticism that the bill was the best way to proceed.
At a hearing by the Ways and Means Committee on Sept 15, Camp
chided the then Democratic majority for scheduling a hearing to deal
with China’s currency rather than examining broader issues between the
two nations.
“In focusing exclusively on China’s currency policy, this hearing
is a lost opportunity,” Camp said. “As significant as China’s currency
misalignment is, our problems with China are so much larger,” he said.
Camp cited a number of his concerns about Chinese economic policy
which included an increase in non-tariff barriers, the growing strength
of state-owned firms, and “its woefully inadequate protection of
intellectual property.”
Camp agreed that China’s currency is significantly undervalued.
“While we shouldn’t obsess over the value of the RMB at the expense of
our other priorities, it would be an enormous mistake to give up
completely on addressing it,” he added.
He urged the administration to set up “high level bilateral
summits” to address the currency issue as well as leading a “robust
multilateral process” to press Chinese currency reforms.
Camp also observed that American fiscal policy has given China
significant leverage over the U.S. “China wouldn’t be accumulating
hordes of currency reserves and U.S. Treasuries as it is now if the
United States stopped racking up the debt at the current unsustainable
pace,” he added.
When the Ways and Means Committee met on Sept. 24 to mark up the
revised currency bill, Camp supported the measure, but added the U.S.
needed a “broader trade agenda” with China and other nations.
The House later passed the currency bill directed at China on a 348
to 79 vote. In the vote, 249 Democrats voted for the bill and 99
Republicans.
The bill approved by the House would clarify current law to allow
the Commerce Department to impose countervailing duties on Chinese goods
to offset the effect of the country’s currency policies.
With the legislation, countervailing duties would be available to
any U.S. industry that could demonstrate it has been “materially
injured” by imports from the country with the undervalued currency.
During the House floor debate, Camp said there is broad agreement
in Congress that China’s currency is undervalued.
“We all agree China’s currency is fundamentally misaligned,” Camp
said, but then blasted the Obama administration and Congress for pushing
a limited trade agenda over the past two years.
“It’s disappointing this is the sum total of our agenda,” he said.
The bill was never considered by the Senate.
While a senior Senate Democrat, Sen. Charles Schumer, is a vocal
proponent of currency legislation directed at China, the chairmen of the
Senate Banking and Finance Committees have been more cautious about
pushing legislation as has Senate Majority Leader Harry Reid.
** Market News International Washington Bureau: (202) 371-2121 **
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