Found this article and recalled the direction this thread was going. Figured it was better to post it here, rather than start another controversy.
Lawmakers Push Bill on Chinese Currency
By JIM ABRAMS
Associated Press Writer
WASHINGTON -- Congress for the second time in two days Thursday gave notice to both China and the Bush administration that it will take action if nothing is done about undervalued Chinese currency that gives Chinese goods an advantage over American competition.
"We are playing by the rules. We think the Chinese government is cheating," Rep. Tim Ryan, D-Ohio, said in promoting a bill that defines exchange rate manipulation as a prohibited export subsidy and sets guidelines for U.S. agencies to sanction China and protect U.S. industries.
Ryan was joined in sponsoring the bill by Rep. Duncan Hunter, R-Calif., chairman of the House Armed Services Committee, who expressed concern that China was using the billions of dollars amassed from currency manipulation to buy advanced weaponry from Russia and other countries.
The bill also outlines steps to protect the U.S. defense industry from unfair Chinese competition.
On Wednesday, the Senate showed strong support for a proposal to place a 27.5 percent tariff on all Chinese products if China does not revalue its currency.
The amendment to a bill authorizing State Department and foreign aid programs cleared a procedural obstacle on a 67-33 vote, but no action was taken on the amendment itself.
The proposal, said Sen. Charles Schumer, D-N.Y., co-author with Sen. Lindsey Graham, R-S.C., "says to the Chinese, `This is a shot across your bow. Reform, because if you don't there are going to be dramatic consequences.'"
The administration has pressed China to let the yuan float against the dollar, but has declined to pursue trade action, saying it was preferable to negotiate with Beijing.
On Thursday, Treasury Secretary John Snow, in an exchange with Schumer at a Senate hearing, said diplomacy was the best means of moving China on the currency issue and that Schumer's proposal "will be counterproductive." But he said he was not satisfied with China's response so far. "Are they moving fast enough? No, I wish they would move a lot faster."
The Chinese currency has been set at about 8.28 yuan per dollar over the past decade, a rate that analysts say undervalues the yuan by up to 40 percent. That makes Chinese exports significantly cheaper and drives up the cost of U.S. products sold in China.
Last year, the U.S. trade deficit with China hit $162 billion, more than one-quarter of the nation's record overall trade deficit of $617 billion.
On Monday, the administration announced it will bring trade cases against China to determine whether quotas should be re-imposed to protect textile and clothing manufacturers.
Ryan said that unlike other congressional attempts to impose sanctions on trading partners, they made sure their legislation complied with World Trade Organization rules. "It is going to be very difficult for the president and the administration to blow this off," he said.
Their legislation is supported by a coalition of business and labor groups, including the AFL-CIO and the U.S. Business and Industry Council.
On the Net:
China Currency Coalition: http://chinacurrencycoalition.com/