NAM Rejects Chinese Denial of Currency Manipulatio
Washington, DC, January 23, 2006--Reacting today to a Chinese bank official’s claim that the value of his nation’s currency, the yuan, is set by market forces, National Association of Manufacturers (NAM) president John Engler characterized the statement as a “regrettable step backward after some incremental progress on this crucial issue appeared to have been made with China last year.
“U.S. manufacturers are again urging our own government officials, those from our industrialized trading partners, and both the World Trade Organization and International Monetary Fund to step up pressure on China to move its currency toward market valuation.
“Any first year economics student can clearly see that China’s massive, record dollar reserves are working to keep its yuan significantly undervalued,” explained Engler, referencing the unit of Chinese currency. “China’s latest denial of this obvious truth is difficult to understand.
“Equally difficult to understand is the Chinese assertion that the yuan’s valuation has no bearing on the record U.S. trade deficit and China’s record trade surplus,” Engler continued. “If it indeed speaks for President Hu’s administration, this bank official’s statement implies that U.S. manufacturing workers are overpaid, and that America should simply accept an inevitable global migration of industry to China.
“American workers are well-paid because they’re the best and most productive in the world,” he said, “and thanks to that world-leading productivity, U.S. manufacturing’s labor costs represent only about 11 percent of total costs. So, again, the Chinese are barking up the wrong tree.
“That said,” Engler added, “Congress and other policymakers can and must do much more to help reduce the high cost of doing business here in America so our workers can maintain their well-earned high standard of living. For example, if we’re going to compete successfully in the 21st century, U.S. industry needs reliable and affordable supplies of energy.”
Engler also noted pressing policy needs to increase incentives for innovation, better train America’s students and workers for high-skill jobs, reduce regulatory burdens and get a handle on health care spending.
“U.S. manufacturing workers can compete and win against any global rival, provided the playing field is level. But the field won’t be level as long as China and other trading partners keep their currencies undervalued,” Engler concluded.
