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China's Currency Manipulation Continues to Claim American Jobs

AISI President and CEO
Thomas J. Gibson

It should be no surprise that people across the country are sending the message to Washington that they are concerned with jobs and the U.S. government’s massive debt and trade deficit.  We have needed a strong national pro-manufacturing agenda for over a decade and the manufacturing sector, steel in particular, has not been quiet about it.  In order to grow our economy, we must increase the number of things we actually produce here domestically. 

Producing things competitively in America is not what is holding us back.  We built this country on our strong manufacturing base, but it is being stolen out from under us.  Jobs are flying out of our country in the blink of an eye as we allow China to continue to prosper from mercantilistic and market-distorting industrial practices.  We know China is a major contributing factor to the massive job losses.  The question is:  do Congress and/or the Administration have the will to address this problem and ensure jobs born here in America remain resident here?  This is about our future too, and jobs we have yet to create.

The United States has the largest bilateral trade deficit by far with China, largely due to their WTO-illegal practices.  Over the past 16 years, China’s currency (the “RMB”) has been pegged to the U.S. dollar and is severely undervalued. Again, the surprise factor is way past, and further, the injury to us is not an accident.  China’s government intentionally undervalues its currency in order to gain an unfair export advantage and edge out its global competitors.

This currency undervaluation distorts trade by acting as a subsidy that artificially reduces prices on exports from the country undervaluing its currency, and as an added tariff on imports into that country.  This undermines U.S. efforts to increase our exports to create jobs, and it causes large and chronic trade deficits that are unsustainable.  This is not an insignificant practice.  Prominent economists have concluded that China’s currency may be undervalued by as much as 40 percent which makes this market-distorting practice the largest subsidy that the government of China provides to its manufacturers.  

Domestic manufacturers and their workers can compete with anyone in the world on a level playing field, but we cannot compete against the government of China.  Diplomatic actions have failed to result in China taking action to allow its currency to appreciate and, at a time of 9.5 percent national unemployment, (actually 16.5 percent when including those who have stopped looking for work or involuntarily working part time) America can no longer allow our manufacturing base to continue to be hemorrhaged overseas. 

The U.S. government has a responsibility to act in our national economic interest, which is to defend against China’s currency mercantilism, so that we can make more things in America, promote more manufacturing in the United States and reverse the manufacturing jobs loss in our country.  Congressmen Tim Ryan (D-OH) and Tim Murphy (R-PA) recognize this and have introduced legislation in the House of Representatives, H.R. 2378, the Currency Reform for Fair Trade Act, which provides a mechanism that will empower the U.S. Commerce Department to utilize the existing countervailing duty and antidumping laws to provide U.S. industries a remedy for the injury caused by currency manipulation. In the Senate, Senator Charles Schumer (D-N.Y.) has also introduced similar legislation, S. 3134, the Currency Exchange Rate Reform Act of 2010.

Americans have lost enough and it is time to get serious about rebuilding our national economy, strengthening U.S. manufacturing and creating jobs. When Congress returns from its August recess, it must take up and pass immediately the Currency Reform for Fair Trade Act (H.R. 2378) and the Currency Exchange Rate Reform Act of 2010 (S. 3134).

We must never forget that, just as Chinese government currency manipulation and other unfair Chinese trade practices have cost millions of good jobs in traditional U.S. manufacturing industries, so too will these policies – if left unaddressed – continue to impede our economic recovery and cost millions of good, future, advanced manufacturing jobs.

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