CHINA CURRENCY COALITION WASHINGTON, D.C.
FOR IMMEDIATE RELEASE
Contact: Meg Mullery 202-342-8439
China's Record Foreign Currency Reserves No Surprise to U.S. Coalition
(Washington, D.C.) (January 18, 2006) – China's foreign currency reserves rising 34 percent in 2005 to a record $818.9 billion amid surging exports was no surprise to the China Currency Coalition, according to its counsel David A. Hartquist. A report last Monday by China's central bank noted that reserves rose by $208.9 billion from the end of 2004. At that rate, China's reserves could reach $1 trillion this year.
"The China Currency Coalition has had this red flag raised since the coalition's inception more than a year ago," said Hartquist. "The record $819 billion in reserves is the consequence of the substantial undervaluation of China's currency, the yuan, which the coalition and many experts believe should be revalued upward by about 40%. In effect, the Chinese government subsidizes exports by 40%—violating World Trade Organization (WTO) and International Monetary Fund (IMF) global trading rules—cheating U.S. companies out of sales and costing American workers good jobs," he stated.
The China Currency Coalition also contends that China is not only undervaluing its currency, but seriously understating its official trade data. "These numbers are phony, as the coalition pointed out last week when China reported its 2005 trade surplus at about $101 billion," Hartquist continued. "We know that it's actually about $435 billion, based on our aggregation of more reliable trade statistics from China's trading partners."
"China must change its ways, not only to comply with already agreed-to international trade obligations, but for its own good," Hartquist concluded. "The cosmetic changes China made in its currency last summer fool no one. The banking system is a train wreck with an estimated $800 billion in bad loans outstanding. Yet the Chinese leadership seems frozen in time, unable to agree on a competent strategy to avoid their system crashing like a house of cards."
David A. Hartquist, an international trade attorney with the Washington, D.C. law firm of Collier Shannon Scott, PLLC, serves as counsel to the China Currency Coalition. Its co-chairs are AFL-CIO Secretary-Treasurer Richard L. Trumka and Doug Bartlett, Chairman of Bartlett Manufacturing Company, Inc., in Cary, Illinois, also a member of the United States Business Industry Council.
The China Currency Coalition is an alliance of industry, agriculture, and worker organizations whose mission is to support U.S. manufacturing by seeking an end to Chinese currency manipulation. For more information, visit www.chinacurrencycoalition.org.