China Is Resisting Pressure to Relax Rate for Currency
By Peter S. Goodman
Washington Post Foreign Service
Monday, September 1, 2003; Page A01
SHUNDE, China -- Inside a sprawling factory here, 18,000 laborers each work for about $6 a day against the ceaseless clatter of machinery, cranking out more than 15 million microwave ovens a year, about 40 percent of those sold worldwide. Two-thirds of them are destined for the United States, Europe and Japan in a flow of exports that has roughly doubled over the last three years, fueled in part by China's cheap currency.
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Many analysts view Snow's visit to Beijing and the administration's larger pressure campaign as political theater aimed at shoring up the support of old-fashioned
manufacturers and labor interests in Rust Belt states. But while some U.S. industries, such as textiles and furniture, have been hammered by cheap Chinese imports, others
benefit from the low yuan. U.S.-based multinational companies such as Dell Inc. and Texas Instruments Inc. use cheap labor here to make products that are shipped for sale
in other markets; if the yuan rose in value against the dollar, it would raise these companies' labor costs because they would need more dollars to pay the same salaries
here. And with a fixed currency, companies that make and sell goods within China, potentially the world's largest consumer market, are girded against any change to the
lucrative status quo.
"If you change the peg and revalue the renminbi it's going to disrupt the supply chain, the way that we are set up here," said Mark Steele, president of China operations for
ITT Industries Ltd., a multinational company that makes keypads for phones built here by Motorola for sale in China, which has more mobile-telephone subscribers than any
other country. "I don't think, economically, you can stop the shift of manufacturing jobs to China. If you change the value of the renminbi, all it's going to do is make us less
competitive."
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