CHINA CURRENCY COALITION WASHINGTON, D.C.
China’s Undervalued Yuan Pushes Trade Deficit with U.S. To A Staggering $162 Billion
(Washington, D.C.) (February 10, 2005) – A coalition of U.S. organizations committed to maintaining a strong industrial base charges that the Chinese government’s refusal to address the issue of revaluation of its currency has pushed the U.S. trade deficit with China to a staggering $162 billion.
The China Currency Coalition, responding to today’s Department of Commerce annual trade statistics announcement, noted that the U.S. trade deficit with China grew over 30% in 2004. At this pace, the bilateral trade deficit with China will more than double in three years, which, according to the coalition, is a significantly shorter timeframe than past projections. Of major concern to the coalition was the data reflecting that imports have outpaced exports during 2004. U.S. imports from China increased 29%, while U.S. exports to China grew only 22%.
“The undervalued yuan continues to push the bilateral deficit to record heights, depressing employment in the manufacturing sector and threatening the global financial system” said David A. Hartquist, spokesperson for the coalition. “Global markets cannot sustain the accelerating imbalances that result, in large part, from China’s undervalued exchange rate.”
The coalition describes job growth in the manufacturing sector in 2004 as anemic, attributable to competition from Chinese products that effectively are subsidized by the 40% undervalued yuan. While nonfarm employment increased by 2.2 million jobs last year, manufacturing employment increased by only 33,000 jobs over the entire year, and actually declined since August. The December decline, alone, amounted to 25,000 jobs. Since the recession in 2001, employment in the manufacturing sector declined by 2.9 million jobs.
China’s undervalued yuan continues to destabilize global financial markets. China’s foreign exchange reserves increased to $609.9 billion in 2004, a 41% increase since 2003, and amounting to more than a third of China’s Gross Domestic Product. In addition, the money supply continues to increase at a rate of 12 to 13 percent and official estimates of inflation exceed 5%, a significant increase over the one percent deflation of two years ago.
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.
David A. Hartquist is a senior member and head of the International Trade
and Customs practice at the Washington, D.C. law firm of Collier Shannon Scott