Washington, DC, May 11, 2006--The National Association of Manufacturers (NAM) announced its disappointment that the U.S. Treasury Department chose once again not to cite China for currency manipulation in today’s Treasury Report to Congress.
“The Chinese yuan has moved only 3.4 percent since July 2005. That is just not enough,” said NAM president John Engler.
“Last December, Treasury Secretary John Snow said that actions taken by the Chinese government did not yet fulfill their commitments. And since then, instead of allowing the yuan to appreciate, China has accumulated almost $100 billion more in reserves,” said Engler.
The Chinese government has amassed almost $900 billion in foreign exchange reserves to suppress pressure on the yuan to appreciate. In recent months, authorities ranging from the U.S. Treasury Department to the International Monetary Fund (IMF), and the G7 Finance Ministers (Canada, France, Germany, Italy, Japan, United Kingdom and United States) have expressed concern about global trade imbalances and have called on China to allow greater flexibility in the value of the yuan.
“China is spending $20 billion a month to keep the yuan undervalued instead of investing in their domestic economy and buying goods from other countries,” said Patricia Mears, NAM’s director of international commercial affairs. “This is globally destabilizing and has to stop. It’s time for China to make good on promises made repeatedly over the past 10 months and actually allow greater flexibility in their currency.”
“Economic history shows that severe currency misalignments, if not dealt with, could increase the dangers of protectionism,” Engler said. “A citation for currency manipulation would have put China on notice that the U.S. government is serious about this. Unfortunately, after moving the ball to the one yard line, Treasury has decided to take a knee.”
