China Exchange Rate Transparency Act of 2023

Floor Speech

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Mr. McHENRY. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 839) to require the United States Executive Director at the International Monetary Fund to advocate for increased transparency with respect to exchange rate policies of the People's Republic of China, and for other purposes, as amended.

The Clerk read the title of the bill.

The text of the bill is as follows: H.R. 839

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE.

This Act may be cited as the ``China Exchange Rate Transparency Act of 2023''. SEC. 2. FINDINGS.

The Congress finds as follows:

(1) Under Article IV of the Articles of Agreement of the International Monetary Fund (IMF), the People's Republic of China has committed to orderly exchange rate arrangements, the avoidance of exchange rate manipulation, and cooperation with the IMF to ensure ``firm surveillance'' of the exchange rate policies of the People's Republic of China. Pursuant to Article VIII of the Articles of Agreement of the IMF, the IMF may require the People's Republic of China to furnish data on gold and foreign exchange holdings, including assets held by non-official agencies of the People's Republic of China.

(2) In its November 2022 report, entitled ``Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States'', the Department of the Treasury concluded, ``China provides very limited transparency regarding key features of its exchange rate mechanism, including the policy objectives of its exchange rate management regime and its activities in the offshore RMB market.''. The Department continued: ``China's lack of transparency and use of a wide array of tools complicate Treasury's ability to assess the degree to which official actions are designed to impact the exchange rate.''.

(3) In that report, the Department further noted that ``China's failure to publish foreign exchange intervention and broader lack of transparency around key features of its exchange rate mechanism make it an outlier among major economies and warrants Treasury's close monitoring.''. SEC. 3. ADVOCACY FOR INCREASED EXCHANGE RATE TRANSPARENCY FROM CHINA.

The Secretary of the Treasury shall instruct the United States Executive Director at the International Monetary Fund (in this Act referred to as the ``IMF'') to use the voice and vote of the United States to advocate for--

(1) increased transparency from the People's Republic of China, and enhanced multilateral and bilateral surveillance by the IMF, with respect to the exchange rate arrangements of the People's Republic of China, including any indirect foreign exchange market intervention through Chinese financial institutions or state-owned enterprises;

(2) in connection with consultations with the People's Republic of China under Article IV of the Articles of Agreement of the IMF, the inclusion of any significant divergences by the People's Republic of China from the exchange rate policies of other issuers of currencies used in determining the value of Special Drawing Rights; and

(3) during governance reviews of the IMF, stronger consideration by IMF members and management of the performance of China as a responsible stakeholder in the international monetary system when evaluating quota and voting shares at the IMF. SEC. 4. SUNSET.

This Act shall have no force or effect on or after the date that is 30 days after the earlier of--

(1) the date that the United States Governor of the IMF reports to the Congress that the People's Republic of China--

(A) is in substantial compliance with obligations of the People's Republic of China under the Articles of Agreement of the IMF regarding orderly exchange rate arrangements; and

(B) has undertaken exchange rate policies and practices consistent with those of other issuers of currencies used in determining the value of Special Drawing Rights; and

(2) the date that is 7 years after the date of the enactment of this Act.

Mr. Speaker, I rise in support of H.R. 839, the China Exchange Rate Transparency Act of 2023, introduced by the gentleman from Pennsylvania (Mr. Meuser).

The China Exchange Rate Transparency Act reflects a bipartisan objective to hold China accountable for its poor economic governance.

The International Monetary Fund's articles of agreement require member countries to `` . . . collaborate with the Fund and other members to assure orderly exchange arrangements and to promote a stable system of exchange rates.''

In other words, to remain a member of the IMF, a country should avoid manipulating exchange rates to gain an unfair competitive advantage over other member countries.

According to the Treasury Department's November 2022 Foreign Exchange Report, ``China's lack of transparency and use of a wide array of tools complicate Treasury's ability to assess the degree to which official actions are designed to impact the exchange rate.''

This is just another barrier created by China's economic governance that prevents us from gaining basic insights into the world's second largest economy.

This opacity threatens the core mission of the IMF, which was established to help monitor exchange rate agreements.

It is ironic that China is always the one who demands a greater voice at the IMF, even if its actions undermine the fund's ability to be effective.

For too long, we have seen China dismiss international rules of the road. From debt restructuring in the developing world to massive Chinese export credits, China has refused to work with other economies to find global solutions.

Mr. Meuser's bill will help prevent China from undermining yet another key area of cooperation--the IMF's monitoring of exchange rates.

It will require the Treasury Department to push for greater transparency in China's exchange rate management during the IMF's economic reviews of China.

The bill would also make future reviews of Chinese shareholding in the IMF contingent on Beijing becoming a more responsible player in the international monetary system.

We need Treasury to take a firm stand at the IMF and insist that China adhere to the exchange rate policies of other advanced economies, or at the very least, disclose what those policies are.

This is important for the global economy, and it is certainly important for the American economy and American workers.

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Mr. McHENRY. Madam Speaker, I yield 4 minutes to the gentleman from Pennsylvania (Mr. Meuser) to explain his bill.

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Mr. McHENRY. Madam Speaker, I yield myself the balance of my time.

I reiterate that Mr. Meuser's bill will help prevent China from undermining yet another key area of cooperation; and that is the IMF's monitoring of exchange rates.

Exchange rates affect the cost of goods and services in every district in America. Whether or not China is adhering to international norms affects our economy, it affects the global economy, and we need to address that.

We have legislation that enables us to address that. It enables us to speak in a bipartisan way that China's currency manipulation we will not stand for as a statement of American policy.

This bill will require the Department of the Treasury to push for greater transparency in China's exchange rate management during the IMF's economic reviews of China. That is the way we are going to do it.

We have sound policy. I urge my colleagues to support it, and I thank my Democratic colleagues and Republican colleagues on committee for working together on this bill, as well as Mr. Meuser of Pennsylvania for his leadership on this important issue.

Madam Speaker, I urge adoption of this bill, and I yield back the balance of my time.

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Mr. McHENRY. Madam Speaker, on that I demand the yeas and nays.

The yeas and nays were ordered.

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