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Obama to China: Currency and trade imbalances a focal point
President Obama has pledged to make currency and trade imbalances a focal point of his first trip to China as president.
President Obama has pledged to make currency and trade imbalances a focal point of his first trip to China as president.
In
an interview with Reuters, Obama said cheap imports from China have
been a benefit to consumers but were made possible by “huge debt” that
is unsustainable.
He also said manufacturers in the U.S.
“have legitimate concerns” about their ability to sell products into
China, and suggested the current imbalance with China cannot be allowed
to stand.
The U.S. trade deficit with China stands at $143
billion through August, and $20.2 billion in that month alone. China
also holds about $2.2 trillion in foreign currency reserves, mostly in
U.S. dollars.
China pegs its currency to the dollar, so even
as the dollar hit its lowest point in 15 months on Monday, it did not
lose ground to the yuan.
That’s led to renewed calls for
Congress and the administration to do something, since the lower
Chinese currency makes it easier for China to sell products in the U.S.
“I
think it is significant he brought this up in an interview and it’s
more than a passing comment,” said Pat Mears, who works on China issues
for the National Association of Manufacturers.
Mears noted that China started to allow
the yuan to appreciate only after pressure from Congress, the George W.
Bush administration and other trading partners.
A bipartisan group of lawmakers led by Rep. Tim Ryan (D-Ohio) wrote to Obama last week criticizing him for not labeling China a currency manipulator. They’ve offered legislation that would impose tariffs on imports from China if it is found to manipulate its currency, but the legislation has stalled this year as Democrats give the administration time to work with China’s government.
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