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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Box-By-The-Riviera™ who wrote (628)	9/9/2003 2:12:57 PM
From: russwinter	Read Replies (3) \| Respond to of 110194

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.