Chinese Currency Accountability Act of 2023

Floor Speech

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Mr. DAVIDSON. Mr. Speaker, I rise in support of H.R. 510, the Chinese Currency Accountability Act. I was proud to introduce this measure last year, which the Financial Services Committee embraced with a vote of 40-0.

Mr. Speaker, the International Monetary Fund acts as the world's lender of last resort, and its Special Drawing Rights serve as a unit of account for its activities. SDRs are also important reserve assets on the balance sheet of central banks. As such, SDR holdings can earn interest, and SDR liabilities can incur costs.

Prior to 2016, both the value and interest rate of the Special Drawing Rights was determined by major currencies issued by market economies and their central banks and overseen by democratic governments. They were the dollar, the euro, the yen, and the pound sterling.

China is not a market economy, so it is astonishing that the International Monetary Fund, with the approval of the current Treasury Department, then decided to add the Chinese renminbi to its currency basket. On a number of measures, the renminbi was nowhere near the level of these other currencies, and, of course, the Chinese Central Bank is the furthest thing from what one would call independent or representative of a market economy. This is still the case today.

Even more bewildering was the 2022 decision to increase the renminbi's weight, the proportion of influence it has, within the currency basket.

By this time, it was not only clear that China's exchange rate management remains subject to the whims of the Chinese Communist Party, but the IMF also knew that China's predatory lending to developing countries was putting the viability of IMF programs in jeopardy. In fact, China's Belt and Road Initiative is designed to undermine the International Monetary Fund, so why would IMF grow the rate or influence of it after having already made the mistake of even including it?

Currently, China's Communist Party is an economic and strategic rival, and hopefully it remains a rival in the market. However, China should not be allowed to skirt the rules at the expense of American taxpayers and at the expense of our market.

It is unacceptable for the IMF to preach to the world on debt transparency, the rule of law, and central bank independence while it is rewarding the Communist Party in China for violating every single one of these principles.

Our legislation says enough is enough. It requires the Treasury Department to oppose further increases of the renminbi for the IMF's currency basket until Treasury can certify that China is complying with the rules of the road.

As a member of the World Trade Organization and other international organizations China is part of, if we follow the rules, China should be held to the same standards. Of course, they are not doing that. It would include upholding China's obligations under the IMF's Articles of Agreement and complying with the same lending rules that other large economies have committed to.

This also means China would have to take significant steps toward restructuring its Belt and Road loans so that they are not actually working to undermine the IMF. In other words, the Chinese Currency Accountability Act isn't about holding China to different standards, but, rather, holding them to the exact same standards everyone else is held to.

Mr. Speaker, I urge all of my colleagues to support this measure.

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