The increasingly contentious issue of China's growing trade surplus with the United States and the corresponding loss of American manufacturing jobs burst into sharp debate Tuesday at a meeting of the House International Affairs Committee.
Both Republicans and Democrats hurled tough questions at Bush administration China trade expert Grant Aldonas. They wanted to know what Washington is doing to remedy the trade imbalance and halt the hemorrhage of American manufacturing jobs. The U.S. industrial sector has lost jobs for 32 consecutive months. The belief is that American manufacturers are losing out to cheap Chinese imports that are often illegally dumped in the U.S. market.
Brad Sherman, a Democratic congressman from California's San Fernando Valley, accused the administration of extreme weakness in dealing with China.
"We're fiddling around with a dumping case here or there in the face of a 40 per cent violation [through exchange rate undervaluation] every day on every item," he said. "And we don't do anything except talk [to the Chinese about the problem.] I've got to commend the Chinese negotiators for one thing: They're able to wait until the Americans leave the room before they start laughing."
Mr. Sherman and others believe that the Chinese currency is 40 per cent undervalued against the dollar. They demand a Chinese currency revaluation.
Mr. Aldonas, the assistant secretary for trade in the Commerce Department, sought to deflect criticism by emphasizing recent sharp gains in U.S. exports to China. He promised tough action in applying American trade laws to unfair Chinese trade practices.
Mr. Aldonas, himself a trade lawyer, agreed that because so much of its fast-growing economy is still state directed China can not be designated a market economy. He agreed that the Chinese currency is undervalued.
The assistant secretary for trade drew attention to the widespread Chinese practice of ignoring international intellectual property rules. "What we have in China right now using software as an example is that about 90 per cent of software being used is pirated," he said. "A fair amount of that is software used in the halls of the Chinese government. That has to end."
With U.S. presidential and congressional elections looming in 12 months time, China trade is certain to remain a contentious issue.