A few days ago I posted an article on China’s warning to the approach outlined below.
They warned on to get into a trade dispute or question their yuan policies.
These two articles show the rock and a hard place we find ourselves in by being so over leveraged (in debt) with China. If they continue on this course it will be “interesting” (no good results) to see what China’s response will be.
We could be witnessing the initial trigger that kills the dollar and plunges us into hyper-inflation.
Which opens the door to one world currency and one world government…
(Link to earlier article: Chinese think tank warns US it will emerge as loser in trade war)
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Geithner Steps up China Yuan Policy Criticism
U.S. Treasury Secretary Timothy Geithner sharpened his criticism of China’s exchange rate policies, saying the yuan was strengthening too slowly and that he will look for new ways to get Beijing to move faster.
In testimony released on Wednesday and prepared for U.S. lawmakers considering a tough new trade law, Geithner called on China to allow “significant, sustained appreciation over time” and for the yuan to “fully reflect market forces.”
“We are concerned, as are many of China’s trading partners, that the pace of appreciation has been too slow and the extent of appreciation too limited,” Geithner said in remarks to the U.S. Senate Banking Committee to be delivered on Thursday.
“We will take China’s actions into account as we prepare the next Foreign Exchange Report, and we are examining the important question of what mix of tools, those available to the United States and multilateral approaches, might help encourage the Chinese authorities to move more quickly.”
Geithner’s testimony comes amid a rising chorus of support from U.S. lawmakers and industry groups for punitive action, including a bill that would slap duties on Chinese imports to force Beijing to let the yuan rise.
The effort is seen in part as an election year bid by lawmakers eager to show voters that they are taking action to revive the economy and are sensitive to high unemployment, although economists say currency revaluation won’t by itself eliminate the U.S. trade deficit with China.Geithner did not specifically mention the trade bill in his testimony but pledged to work with Congress “to find ways to best advance and best protect our economic interests in this important strategic relationship.”
Geithner said the undervalued yuan, or renminbi, has boosted China’s exports and has encouraged the outsourcing of production and jobs from the United States.
China’s progress should be judged on the pace and extent of appreciation and the level of intervention by Chinese authorities to slow the currency’s strengthening, he said. This should decline as the yuan approaches its fundamental market-determined value, Geithner said.
“Continued heavy intervention, in contrast, would support the judgment that the currency remains undervalued,” he added.
He made no reference to Japan’s first intervention in six years on Wednesday to push its own currency down from 15-year highs against the dollar. Analysts said allowing Japan a free pass to intervene would make it harder to persuade China to curtail such activity.
The yuan has risen 1.25% against the dollar since Beijing announced in June that it was ending a currency peg.
In the past five days, however, the yuan has scored its fastest rise since February 2008 — a move that some analysts view as a response to growing U.S. rhetoric.
Geithner for much of this year took a softer approach on China’s yuan, delaying a Treasury currency report for several months before declining to name Beijing a manipulator in July, shortly after Beijing’s de-pegging of the yuan.
His move was aimed at giving Chinese officials some breathing room to resume a gradual rise in the yuan that started in 2005 but abruptly halted in mid-2008.
The next currency report is due October 15, and a declaration that China manipulates its currency could eventually lead to countervailing duties on Chinese goods.
RUST-BELT FRUSTRATION
While congressional efforts to pressure China over its currency have yielded little in the past, U.S. anger over the issue is now so strong that political analysts are not ruling out action before the November 2 congressional election.
But Beijing could counter with measures of its own, dealing a blow to President Barack Obama’s efforts to ease U.S.-China tensions on a range of economic and foreign policy disputes.
“We as a nation, as a Congress, cannot continue to look the other way as China’s currency policies slowly but steadily smother what remains of our American manufacturing,” Representative Tim Ryan, a Democrat from the hard-hit manufacturing state of Ohio, told a House of Representatives panel.
“It is time for us to act,” Ryan said, pushing for broad support for a bill targeting China’s exchange rate practices that has 133 co-sponsors in the 435-seat House.
The House bill would instruct the Commerce Department to apply duties against imports from countries that persistently undervalue their currencies. A separate bill in the Senate would give the White House discretion to avoid taking action.
Some U.S. economists say threatening tariffs to get China to revalue its currency will not work.
“Every step in the protectionist argument — we know how much the yuan is undervalued, undervaluation drives the trade deficit much higher and it costs the U.S. millions of jobs — turns out to be partly or completely wrong,” said Derek Scissors, trade expert at the Heritage Foundation.
“The better course for the U.S. is to make free movement of money in and out of China the highest priority.”
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Click on the article title for a link to full original referenced article.
myBlessedHope 