Here's an actual press release with the gory, insane details. The market ought to be off 7% just on this today. A depeg probably needs to happen, but it won't be pretty:
Senators seek tariffs against China
Lawmakers want China to revalue its currency
By Corbett B. Daly, CBS Marketwatch
Last Update: 1:01 PM ET Sept. 9, 2003
WASHINGTON (CBS.MW) -- A group of senators introduced
legislation Tuesday to impose an across the board
tariff increase of 27.5 percent on imports from China
to prod the Chinese government to drop its nearly
decade-old currency peg to the U.S. dollar.
"This legislation is a tough-love effort to get the
Chinese to stop playing games with their currency in
order to level the playing field for American
companies trying to compete with goods and service
coming from China," said Sen. Charles Schumer, D-N.Y.,
who is leading the effort to pressure the Bush
administration to spur China to change its currency
policy.
The bills sponsors also include Sens. Evan Bayh,
D-Ind, Jim Bunning, R-Ky., Elizabeth Dole, R-N.C.,
Richard Durbin, D-Ill., Lindsey Graham, R-S.C.
American manufacturers complain that the fixed Chinese
exchange rate provides an unfair cost advantage to
China's exports and is therefore costing America
thousands of jobs. The U.S. manufacturing sector has
shed 2.7 million jobs over the last three years.
The manufacturing industry and lawmakers convinced
Treasury Secretary John Snow to raise the issue with
the Chinese government in a trip to Beijing last week.
There, Snow unsuccessfully urged Chinese Premier Wen
Jiabao to drop the country's peg to the U.S.
greenback.
China has fixed its currency at roughly 8.3 yuan to
the dollar since 1994, and Wen told Snow that it is in
both Chinese and U.S. interests to maintain the
stability of the yuan, according to state media
reports.
The National Association of Manufacturers, the top
lobbying group for America's factories, praised Snow
for his rhetoric in Beijing last week, but said that
China's response was inadequate.
"China needs to take this issue seriously and move
quickly to end the undervaluation of the yuan and
allow markets to determine the currency's value,
rather than government intervention," said Jerry
Jasinowski, president of NAM.
Schumer and Graham acknowledged that the legislation
is a political move that may never become law.
"My hope is that we'll never get to the bill, because
this hopefully will be addressed," said Graham.
Schumer said the bill is designed "to get everybody's
attention."
A Treasury Department spokesman was not immediately
available for comment, but Graham said "the Treasury
Department helped draft the legislation so they are
supportive."
The issue could become fodder in the 2004 presidential
race, as both parties are increasing the rhetoric
against China.
"The political forces behind this bill are unusual,
probably will never be duplicated again, but that
shows you how deep the problem is," said Graham.
Corbett B. Daly covers the White House and the
Treasury Department for CBS MarketWatch in Washington. |
