Committee Statement: "The Report to the Congress on International Economic and Exchange Rate Policies"
Statement of Charles E. Schumer
U.S. Senate Committee on Banking, Housing, and Urban Affairs
"The Report to the Congress on International Economic and Exchange Rate Policies"
May 26, 2005
Thank you Mr. Chairman.
I appreciate the opportunity to continue to discuss with the Secretary the issue of China's undervalued currency and its general unwillingness to play fair in the global economy - or its pattern of playing by the rules only when it suits their purposes. The Administration's strategy of "quiet diplomacy" has yielded few tangible results, and it's time for our government to take more specific action.
Secretary Snow, as you know, I have long been concerned with China's long list of misdeeds - currency manipulation, violation of intellectual property laws, limitation of access to their markets, and subsidizing Chinese companies - misdeeds that also happen to be serious violations of WTO rules.
We've lost a lot of jobs here in the U.S. because of these actions - but the problem goes beyond job losses. It remains a mystery to me how those who claim to support free trade can stand so idly by while one of the fastest-growing economies in the world so willfully flouts the rules.
Simply put, if you believe in free and fair trade, you should want the Chinese to play by the rules, and you should want their currency to float. The "invisible hand" at work, so to speak. I was glad to see in your testimony that the Administration now supports a gradual shift towards a full float in China. The question is, how do we push them to get there?
I have been working with my colleague from South Carolina, Lindsey Graham, to try and level the playing field with China on the currency issue. We introduced an amendment on China currency during consideration of the State Department Authorization Bill a few weeks back, and to our pleasant surprise, two-thirds of the Senate voted with us - including half of the Senators of your party, Mr. Secretary. This sends a clear signal to the Chinese to shape up. We've been promised an up-or-down vote on our bill before August recess.
It would be preferable, rather than imposing tariffs, for the Chinese to act on their own. That's what we hope will happen. But our bill sends a clear signal to the Chinese that if there isn't some movement on their part, the U.S. Congress will act.
Your report was the first time that the Bush Administration has called Chinese currency policies "highly distortionary," but it still falls short of finding them guilty of actual "currency manipulation." It's unclear to me and Senator Graham what else the Chinese would have to do - or not do - to have the Administration finally find them guilty of manipulation. You've stepped up to the plate, now it's time to swing the bat.
To help you along, Senator Graham and I have also reintroduced our bill that would define currency manipulation for you, thereby making it easier for Treasury to take decisive action.
Mr. Secretary, I look forward to the opportunity to ask you some direct questions about China and the currency report. Thank you, Mr. Chairman.
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