News / Asia

China's Currency Valuation Creates Focal Point Debate

China's Currency Valuation Creates Focal Point Debate
China's Currency Valuation Creates Focal Point Debate
Les Carpenter

U.S. Treasury Secretary Timothy Geithner is set to testify Thursday before the House Ways and Means Committee of the U.S. House of Representatives on China's alleged manipulation of its currency.  The committee Wednesday heard from a number of people, including economists, on possible proposals to push Beijing to stop the manipulation.  That brought responses from another group of economists.   

The congressmen heard that China undervalues it's currency, the Yuan, by as much as 40 percent to give its exported goods an unfair advantage on global markets.  The committee heard several suggestions of what can be done to encourage China to allow the Yuan to strengthen.  One was using retaliatory duties against China under World Trade Organization rules.  But, in a conference call with reporters after the congressional hearing, American Enterprise Institute economist Phillip Levy said that may not be such a good idea.

"The WTO's rules are not very clear on this point and the only way the U.S. could win such a case would be to have a creative and adventurous dispute settlement panel, the sort the US is usually against," said Phillip Levy. "And, of course, there is the persistent question that comes up by law every six months of whether China should be named a currency manipulator.  It's interesting to note that there is remarkably little business support for aggressive stances on Chinese currency.  This is not, by any means, because business is satisfied with China's economic practices or treatment, but when you look at thing like the American Chamber of Commerce in Shanghai's survey of businesses trying to operate in China...I believe the currency came in something like fifth in the order of their concerns...behind things like treatment of foreign investment and intellectual property protections.  so, I think there is some sentiment that's been expressed in the business community that this focus on currency is really a misdirection of U.S. efforts."

Phillip Levy's colleague, economist Desmond Lachman agreed that China's currency valuation is the center of the debate, but he also said he finds there are at least two other issues of equal or greater importance.

"One is that in addition to the currency issue, there's a whole range of non-tariff restrictions that China is resorting to give itself an unfair, competitive advantage on stuff like domestic innovation, stuff of that sort that make it difficult to compete fairly with China," said Desmond Lachman. "So, it's not just the currency issue. That last point I would like to make is that beyond the currency issue, what it's really got to be looking at the imbalance with China as a problem of saving and investment, that there's an imbalance on that score as long as China is saving at a high level you're gonna have this imbalance persisting.  And, we don't see much movement by China to take those measures that would boost domestic consumption that would lay the basis for bringing the global imbalances onto a sustainable path.'

Economist Desmond Lachman says the ideal policy would be for China to cooperate in hashing out a plan to reduce trade imbalances.  That could be done, he says, over a reasonable period of time with China increasing the value of its currency while the United States took measures to increase its household savings rate.  At the same time, Mr. Lachman says, China would have to take the measures needed to increase domestic consumption.  Without working together, he says, would just lead to a train wreck in the not too distant future.

You May Like

Photogallery Early Nigeria Results Show Buhari Leading; Tampering Concerns Mount

One local group monitoring polls is concerned politicians might use security agencies to 'fiddle with the election collation process' at state level More

UN: 7,300 Civilians Killed in Boko Haram Insurgency

A senior UN humanitarian official tells the United Nations Security Council 1,000 people have been killed this year More

Turkish President Warns Iran About Trying to Dominate Middle East

Warning comes amid growing concerns inside Turkey that it will be sucked into a sectarian conflict with its neighbor More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Film Tells Story of Musicians in Mali Threatened by Jihadistsi
X
Greg Flakus
March 30, 2015 6:48 PM
At this year's annual South by Southwest film and music festival in Austin, Texas, some musicians from Mali were on hand to promote a film about how their lives were upturned by jihadists who destroyed ancient treasures in the city of Timbuktu and prohibited anyone from playing music under threat of death. As VOA’s Greg Flakus reports from Austin, some are afraid to return to their hometowns even though the jihadists are no longer in control there.
Video

Video Film Tells Story of Musicians in Mali Threatened by Jihadists

At this year's annual South by Southwest film and music festival in Austin, Texas, some musicians from Mali were on hand to promote a film about how their lives were upturned by jihadists who destroyed ancient treasures in the city of Timbuktu and prohibited anyone from playing music under threat of death. As VOA’s Greg Flakus reports from Austin, some are afraid to return to their hometowns even though the jihadists are no longer in control there.
Video

Video With Coalition Airstrikes, Iraq Entering 'Last Page' of IS Battle

American warplanes joined Iraq's battle against the so-called 'Islamic State' in northern Iraq late Wednesday, as Iraqi ground troops launched a massive assault on Tikrit. Analysts say the offensive could take the coalition a step further towards Mosul, the largest city held by Islamic State forces. Others say it could also deepen already-dangerous sectarian tensions in the region. VOA's Heather Murdock has more from Cairo.
Video

Video Philippines Wants Tourists Spending Money at New Casinos

Tourism is a multi-billion dollar industry in the Philippines. Close to five million foreign visitors traveled there last year, perhaps lured by the country’s tropical beaches. But Jason Strother reports from Manila that the country hopes to entice more travelers to stay indoors and spend money inside new casinos.
Video

Video Civilian Casualties Push Men to Join Rebels in Ukraine

The continued fighting in eastern Ukraine and the shelling of civilian neighborhoods seem to be pushing more men to join the separatist fighters. Many of the new recruits are residents of Ukraine made bitter by new grievances, as well as old. VOA's Patrick Wells reports.
Video

Video Islamic State Prisoners Talk of Curiosity, God, Regret

Islamic State fighter, a prisoner of Kurdish YPG forces, asked his family asking for forgiveness: "I destroyed myself and I destroyed them along with me." The Syrian youth was one of two detainees who spoke to VOA’s Kurdish Service about the path they chose; their names have been changed and identifying details obscured. VOA's Zana Omer reports.
Video

Video Germanwings Findings Raise Issue of Psychological Testing for Pilots

More is being discovered about the co-pilot in the crash of Germanwings Flight 9525 in the French Alps. Investigators say he was hiding a medical condition, raising questions about the mental qualifications of pilots. VOA's Carolyn Presutti reports.
Video

Video Hi-tech Motorbike Helmet's Goal: Improve Road Safety

In cities with heavily congested traffic, people can get around much faster on a motorcycle than in a car. But a rider who is not sure of his route may have to stop to look at the map or consult a GPS. A Russian start-up company is working to make navigation easier for motorcyclists. Designers at Moscow-based LiveMap are developing a smart helmet with a built-in navigation system, head-mounted display and voice recognition. Zlatica Hoke has more.
Video

Video DOJ: Illinois National Guard Soldier Tried to Join ISIS

U.S. federal law enforcement agents arrested two suburban Chicago men accused of trying to join ISIS overseas, while also plotting attacks in the United States. As VOA’s Kane Farabaugh reports from the Midwest state of Illinois, one of those arrested is a soldier of the Illinois National Guard.
Video

Video New Wheelchair Is Easier to Use, Increases Mobility

Traditional push-rim wheelchairs create a lot of stress for arm, shoulder and neck muscles and joints. A redesigned chair, based on readily available bicycle technology, radically increases mobility while reducing the physical effort. VOA’s George Putic reports.
Video

Video Liberia's Almost Last Ebola Patient Grateful but Still Grieving

Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Cambodian Land Grabs Threaten Traditional Communities

Indigenous communities in Cambodia's Ratanakiri province say the government’s economic land concession policy is taking away their land and traditional way of life, making many fear that their identity will soon be lost. Local authorities, though, have denied this is the case. VOA's Say Mony went to investigate and filed this report, narrated by Colin Lovett.
Video

Video Space Program Status Disappoints 'Last Man on the Moon'

One of the films that drew big crowds last week at the annual South by Southwest festival in Austin, Texas, tells the story of the last human being to stand on the moon, U.S. astronaut Eugene Cernan. It has been 42 years since Cernan returned from the moon and he laments that no one else has gone there since. VOA’s Greg Flakus reports.

VOA Blogs

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More