Sunday, October 17, 2010
Treasury Takes No Action on Chinese Currency
The Treasury has made the decision once again to remain undecided. They have delayed a decision to label China a "currency manipulator," despite China's announcement in June that it would allow the exchange rate to move higher. The Treasury announced that it wanted to see global leaders meet at the G-20 before it came to a concrete decision. This also puts the decision off until after the midterm elections, which will allow candidates to campaign on the issue. In September, the House passed a bill authorizing the Commerce Department to impose duties on imports from nations with undervalued currencies. This is merely another example of how politicized the economy ha become. Many would argue that this is dangerous because it takes the focus off of actual necessary economic decisions and policies.
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This is a very important issue which the G-20 needs to take head on. Fair trade is important it is key to the free market system successfully working. As China's powers grow in the economy it is important to make sure that they are not manipulating currency or subsidizing business as this will skew there growth negatively effect other countries economics.
ReplyDeleteThe administration is obviously contemplating its response to this issue very methodically. I recently heard a question and answer session with a senior administrative economic official in the White House, and when he was asked about this very issue he declined to answer. I wonder what the Obama Administration has been doing behind the scenes to alleviate this problem... I suppose we'll know the outcome after the G-20.
ReplyDeleteThis is a very important issue that should not be decided hastily. The Chinese government is very proud of their economic success - more so than anything else. Therefore, forcing them to raise the value of the RMB will not work and will only further strain our relationship with them. This is a decision that must be handled delicately and not forcefully.
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