Speed Read: Geithner sharpens criticism of China
Timothy Geithner arrives to testify at a Senate Banking, Housing and Urban Affairs Committee hearing on Thursday.
(Photo Credit: By Jewel Samad/AFP/Getty Images)
At a Senate Banking Committee hearing, Christopher Dodd (D-Conn.) said that "a disturbing pattern of behavior has emerged" with China and urged the Obama Administration to take more aggressive steps against China.
"It is time to move beyond just talking," he said. "We must take action."
In addition to criticizing China for keeping its currency undervalued, Dodd said China violated international trade agreements, unfairly dumped underpriced goods, anticompetitive subsidies and failed to protect intellectual property rights.
"There is no question that the economic and trade policies of China present roadblocks to our recovery," Dodd said.
The sole witness at Thursday's hearing -- the second of a two-day hearing about China's currency -- was U.S. Treasury Secretary Timothy F. Geithner, who signaled in prepared testimony that the administration is prepared to take a tougher stance on China's economic policies.
More to come: Highlights from his testimony.
[W]e are focusing on three core objectives with China: encouraging China to change its growth model to rely more on domestic demand and less on exports; moving toward a more market-determined Chinese exchange rate; and leveling the playing field for U.S. firms, workers, ranchers, farmers, and service providers to trade and compete with China. With China's economy on a strong footing, it is past time for China to move.
We share the concern of the Committee and many of your colleagues about China's exchange rate policy. After allowing the renminbi to appreciate over time against the dollar from mid-2005 through mid-2008, in July 2008, as the financial crisis intensified, China effectively "re-pegged" to the dollar, and there has been essentially no movement of the renminbi against the dollar over the past two-plus years.
China has had to continue to intervene in the exchange markets on a very substantial scale to limit the upward pressure of market forces on the Chinese currency.
Even with the appreciation of the renminbi against the dollar that has taken place since this process began in 2005, China's real trade-weighted exchange rate is now only 4.9 percent stronger than it was on average from 1998-2002, an unjustifiably small change given that China's productivity doubled during that time.
It is the judgment of the IMF that, in view of the very limited movement in the Chinese currency, the rapid pace of productivity and income growth in China relative to its trading partners, the size of its current account surplus, and the substantial level of ongoing intervention in exchange markets to limit the appreciation of the Chinese currency, the renminbi is significantly undervalued. We share that assessment.
[W]e are examining the important question of what mix of tools, those available to the United States as well as multilateral approaches, might help encourage the Chinese authorities to move more quickly.
We are concerned, as are many of China's trading partners, that the pace of appreciation has been too slow and the extent of appreciation too limited.
Ariana Eunjung Cha
September 16, 2010; 10:49 AM ET
Categories: China , U.S. Treasury
Save & Share: Previous: Data Digest: U.S. consumer purchases of imports lifts current account deficit
Next: Data Digest: Mortgage rates remain at record lows
Posted by: gmrwin | September 16, 2010 3:52 PM | Report abuse