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Passing Currency Reform Legislation Will Serve as First Crucial Step in Addressing China's Unfair Trade Policies 

Let’s face the facts.  China partakes in a laundry list of unfair trade policies, significantly disadvantaging not only hard-workers in the United States, but also other nations around the world.  By sidestepping opportunities to confront China, the United States has become a cleaning service by removing any accountability that China must take for its actions. 

We need to tell China enough is enough, starting with passing the Currency Reform for Fair Trade Act (H.R. 2378).  This bi-partisan legislation, introduced by Reps. Tim Ryan (D-Ohio) and Tim Murphy (R-Pa.) has been amended by the House Ways and Means Committee and is expected to be voted on by the full House as soon as today.  Passing this legislation is a crucial first step in addressing China’s severely undervalued currency, which many prominent economists believe is undervalued by as much as 40 percent. 

Over the past 16 years, China’s currency (the “RMB”) has been pegged to the U.S. dollar.  The RMB’s undervaluation is considered a key element in the Chinese government’s successive 5-year plans to transform China into “the world’s factory.” This fundamental exchange rate misalignment -- maintained through strict currency controls and massive government intervention -- has been central to a Chinese economy that has been geared to, and remains overly dependent on, export-led growth. 

While some note China’s currency manipulation is just one of many trade problems the U.S. has with China, China’s currency undervaluation is the single largest government subsidy to manufacturers in China.  It is and it was a major cause of the global structural imbalances that contributed significantly to the world financial meltdown and to the Great Recession of 2008-2009, which is why Congress must act. 

From behind a “currency wall of protection,” China has promoted its own jobs, investment, production, R&D and exports at the expense of manufacturers in the U.S. and elsewhere.  Further, it has helped build up China’s “strategic” industrial sectors – including steel and steel-related industries – into global powerhouses capable of dominating world markets irrespective of genuine cost-competitiveness.  These government-operated industries have propelled China into a global brand: “China, Inc.” 

Our manufacturers should no longer have to compete with China, Inc.  Yes, there are many other trade practices that need to be addressed with China.  However, when national unemployment remains stagnant at 9.6 percent, this bill will provide American manufacturers with a way to fight back when it’s clear China is cheating and taking good-paying domestic manufacturing jobs from Americans who need them. The steel industry urges the immediate passage of this legislation in the House and for expeditious Senate action so the bill can be sent to President Obama for his signature.

-AISI President and CEO Thomas J. Gibson 

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