Once again the Obama administration refuses to label China a currency manipulator. This is when the U.S.-China trade deficit looks on target to hit $300 billion and China just slapped the United States with a unjustified 22% additional tariff on American SUVs.
In the U.S. Treasury's Semi-Annual Report to Congress on International Economic and Exchange Rate Policies, team Geithner and the Obama administration literally refuse to label China a currency manipulator in spite of overwhelming evidence.
The Report highlights the need for greater exchange rate flexibility, most notably by China, but also in other major economies. Based on the ongoing appreciation of the RMB against the dollar since June 2010, the decline in China's current account surplus, and China's official commitments at the G-20, APEC, and the U.S.-China Strategic and Economic Dialogue (S&ED) that it will move more rapidly toward exchange rate flexibility, Treasury has concluded that the standards identified in Section 3004 of the Act during the period covered in this Report have not been met with respect to China. Nonetheless, the movement of the RMB to date is insufficient. Treasury will closely monitor the pace of RMB appreciation and press for policy changes that yield greater exchange rate flexibility, a level playing field, and a sustained shift to domestic demand-led growth.
Earlier the Senate easily passed a bill to confront China's currency manipulation. The bill is S. 1619: Currency Exchange Rate Oversight Reform Act of 2011. Speaker of the House John Boehner refuses to bring the bill to the House floor for a vote, in spite of the strong bi-partisan support. If the bill was allowed a vote, it is strongly projected to pass and become law, assuming President Obama would not veto the bill.
The reactions are coming in fast and furious. Scott Paul, Executive Director, Alliance for American Manufacturing (AAM) said:
China’s currency is still enormously undervalued—that fact is clear despite the Treasury report. I’m disappointed that President Obama has now formally refused to cite China six times for its currency manipulation, a practice which has contributed to the loss of hundreds of thousands of American manufacturing jobs.
The ball is now is Speaker Boehner’s court, since the President has failed to show leadership in this area. The House of Representatives should pass currency legislation as soon as it returns in January.
GOP hopeful Mitt Romney jumped on the lack of action by this administration, promising to label China a currency manipulator as one of his first acts in office.