Today, Congressman Joe Donnelly invited Treasury Secretary Tim Geithner to visit manufacturers in north central Indiana to talk to Hoosier businesses about the Treasury's recent Report to Congress on International Economic and Exchange Rate Policies that did not label the Chinese government as currency manipulators.
"I'm concerned about the Treasury's failure to label the Chinese government as currency manipulators," said Donnelly. "I often hear from Hoosier business owners--especially in the manufacturing sector--who are trying to compete while one of our chief economic competitors plays by a different set of rules. I invite Secretary Geithner to visit our local businesses and talk to them about their experiences fighting China's unfair trade advantages."
"There's no doubt in my mind that the Chinese government is manipulating their currency," Donnelly continued. "Obviously there is a difference of opinion here, which is why I think this conversation needs to happen. Hoosier manufacturers should have the opportunity to tell the Secretary what's happening on the ground."
Currently, the Chinese government is keeping the value of the yuan artificially low by selling its own currency and buying foreign currency. This straightforward tactic used to manipulate currency is readily apparent in the case of China: the Chinese central bank has accumulated more than $2 trillion in foreign currency and assets and continues to buy foreign currency at a rate of nearly $1 billion a day in order to keep the yuan's value from rising. The effect is that their government can keep Chinese exports artificially cheap while making foreign goods imported to China more expensive--a double edged sword against American manufactures trying to compete globally and also break into the large Chinese market.
Yesterday, the Treasury issued a report that said that while the Chinese government is not a "currency manipulator," their currency, the yuan, remains "undervalued." This semi-annual document is issued by the Treasury to identify any nations that manipulate their currency to receive an unfair trade advantage and this particular report covered the end of 2009 and beginning of 2010. The Treasury concluded that during that time period, no country manipulated their currency.
Today, Congressman Donnelly sent a letter to Secretary Geithner inviting him to visit Indiana to speak directly with Hoosier manufacturers on this issue. Read a copy of the letter here.
Donnelly is a co-sponsor of H.R. 2378, the Currency Reform for Fair Trade Act, which would neutralize the negative effects of misaligned foreign currency by allowing affected American industries and their workers to seek remedies under current trade laws. The bill also would use publicly available data to determine the misalignment in a transparent way, apply a fair and predictable standard for currency misalignment, and create an incentive for foreign governments to stop unfair trade practices to prevent similar abuses in the future. Congressman Donnelly, with other Members of Congress, has also sent several letters to both the Bush and Obama Administrations on this issue. In November 2009, Congressman Donnelly joined colleagues in sending a letter to President Obama regarding inaction by the Obama Administration against China's continued manipulation of its currency.