CHINA CURRENCY COALITION WASHINGTON, D.C.
FOR IMMEDIATE RELEASE
Contact: Meg Mullery 202-342-8439
China’s Undervalued Currency Continues to Hurt
U.S. Manufacturing and Jobs: U.S./China Bilateral Trade Deficit in Upward Spiral
(Washington, D.C.) (September 13, 2005) – U.S. government trade data released today reflect that China’s undervalued currency continues to take a toll on American jobs and the manufacturing sector, according to a coalition seeking an end to Chinese currency manipulation.
The Department of Commerce’s latest economic indicators show that the bilateral trade deficit with China was $17.7 billion in July. “These numbers clearly demonstrate that the annual bilateral trade deficit continues on its trajectory of reaching almost $210 billion in 2005, nearly a 30% increase over the previous high of $162 billion in 2004,” said David A. Hartquist, spokesperson for the China Currency Coalition.
“The ever-increasing deficit with China will continue to hurt manufacturing until China stops subsidizing its currency,” Hartquist continued. “U.S. workers should no longer have to shoulder the burden of China’s export-led strategy.”
The U.S. manufacturing sector continues to bear the brunt of China’s undervalued currency, according to the Coalition. It points to Department of Labor statistics, which show that another 14,000 manufacturing jobs were lost in August alone, resulting in a cumulative decline for the last twelve months of 90,000 jobs. Said Hartquist, “Since January 2001, 2.8 million manufacturing workers have lost their jobs, and there is no reason to expect this downward trend to change.”
The July trade numbers are too early to show the effects of the adjustments China made to its exchange rate regime on July 21, when China changed its peg to a basket of currencies and appreciated the yuan by 2% against the dollar. China claimed that the new currency regime would increase flexibility in the system by allowing the yuan to appreciate over time within certain bounds. If allowed to operate fully within that system, the exchange rate for the yuan already would have appreciated by 12% to a rate of approximately 7.3 yuan per dollar. However, since the July appreciation, China has kept its exchange rate for the yuan at a stable 8.09 yuan per dollar, belying Chinese assertions that the new exchange rate mechanism would reflect market conditions. A chart that shows China’s exchange rate remaining relatively constant, thereby indicating China’s continued intervention in the marketplace to maintain a fixed exchange rate, can be found on the Coalition’s home page: www.chinacurrencycoalition.org.
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, PLLC.