China's Undervalued Currency
For more than a decade, the Chinese government has pegged the value of China's currency - the yuan - to an artificially low level vis-à-vis the U.S. dollar. In July 2005, China implemented certain reforms of its exchange rate system that allowed the yuan to fluctuate slightly against the dollar. However, China continues to keep the yuan's value from rising to market-based levels under this "managed peg" system. The undervalued yuan causes an artificially low price for Chinese goods exported to the United States and other markets, giving Chinese exporters an unfair competitive advantage. Likewise, U.S. plastics exports to China are more expensive than they otherwise would be absent the distorted yuan-to-dollar relationship.
While Congress seeks legislative action to provide relief to U.S. manufacturers, the Administration supports the promotion of high-level U.S.-China dialogues to address economic and exchange rate issues. SPI has been working with groups such as the National Association of Manufacturers and the China Currency Coalition to seek reform of China's exchange rate policies. SPI's objectives are two-fold:
- Aggressive engagement with the Chinese government to seek reform of China's exchange-rate policies to achieve a market-based yuan value.
- Enactment of legislation to provide relief to U.S. manufacturers that are harmed by China's undervalued currency.
To this end, SPI has supported the China Currency Coalition's Section 301 petitions seeking trade remedy relief from USTR and legislation that would provide meaningful relief to U.S. industry from this injurous practice.
Visit SPI's Political Action Center to contact your elected officials expressing your support for legislation concerning currency manipulation.
For Additional Information:
H.R. 5960: Supporting America's Manufacturers Act
S. 2813: China Currency Manipulation Act of 2008
H.R. 2942: Currency Reform for Fair Trade Act of 2007
S. 1607: Currency Exchange Rate Oversight Reform Act of 2007
S. 1677: Currency Reform and Financial Markets Access Act of 2007
China Currency Coalition
U.S. Department of Treasury Semiannual Reports on International Economic and Exchange Rate Policies
