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4/14/2005

Chinese Currency Law Could Save U.S. Jobs

China’s unfair manipulation of its currency is driving up the U.S. trade deficit and costing U.S. manufacturing jobs—and a bipartisan group of members of Congress, unions and businesses have joined together to back a bill in Congress that seeks to preserve U.S. jobs.

The Chinese Currency Act of 2005, introduced today by Reps. Tim Ryan (D-Ohio) and Duncan Hunter (R-Calif.), along with 14 co-sponsors, would define currency manipulation as a violation of existing U.S. trade laws and World Trade Organization rules. It also would require the U.S. secretary of defense to identify when products imported from China threaten U.S. businesses—including many manufacturing operations—vital to the nation’s security.

“It is time for bipartisan congressional action to address the illegal actions of the Chinese government,” AFL-CIO Secretary-Treasurer Richard Trumka said during an April 7 Capitol Hill press conference where he announced AFL-CIO support of the bill, along with Ryan, Hunter and representatives of the China Currency Coalition, a group of unions and businesses. “Currency manipulation is illegal and it undermines America’s industrial base. We are frustrated and angry at the administration’s refusal to move aggressively on this issue.”


Since 1995, China has artificially pegged its currency at about 8.28 yuan to one U.S. dollar rather than letting the international financial markets set the exchange rate, as do virtually all the other nations. With China’s rapid economic growth, its currency would be much more valuable in the global market if the price was allowed to fluctuate.

Undervaluing its currency—some experts say by as much as 40 percent—gives China an unfair advantage in the international marketplace and is a main cause for the record $162 billion U.S. trade deficit with China last year. Such a huge trade deficit, more than 30 percent higher than in 2003, undercuts domestic manufacturing and destroys good U.S. jobs because the nation is importing, on a large scale, products that previously were produced domestically. The rise in the United States’ trade deficit with China between 1989 and 2003 caused the loss of 1.5 million U.S. jobs, according to the Economic Policy Institute.

The United States now imports more than $600 billion worth of goods and services more than the nation produces, undercutting domestic manufacturing and services and increasing U.S. debt to the rest of the world. The enormous trade deficit is a key factor contributing to the loss of nearly 3 million manufacturing jobs since 2001.

Last fall, the China Currency Coalition, which includes the AFL-CIO and the Industrial Union Council (IUC), filed an unfair trade petition against the Chinese government for currency manipulation. The Bush administration rejected the petition without even reading it.


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