In its semi-annual report on world currencies yesterday, the Treasury Department declined to cite China as a currency manipulator.  A formal designation as a “manipulator” would have opened up China to potential penalties.

Interestingly, everyone in the world recognizes that China deliberately intervenes in world markets in order to depreciate its currency, the yuan.  The EU and Japan have begun pressing China for immediate action on the yuan.  And Treasury Secretary Henry Paulson, like his predecessor, John Snow, has repeatedly urged Beijing to revalue.

 Somehow, though, this latest semi-annual Treasury report once again finds wiggle room to let China off the hook.  China will only take the Administration seriously once it is designated as a manipulator.  It’s too bad the Administration doesn’t realize this. 

At what point will the Administration legally acknowledge what it, nearly every economist, and our friends in the EU already know:  China manipulates its currency to gain an unfair trade advantage, harming American businesses and workers.  How many shuttered U.S. factories, how many laid-off U.S. workers, how large a trade deficit must be reached?

The U.S. is on track to hit a $250 billion dollar trade deficit with China this year, 1/3 of our total trade shortfall.  Beijing’s predatory currency manipulation is responsible for a significant share of that gap.

The Chinese government is looking after its own interests.  The question is, when will our Administration do the same?

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This entry was posted on Thursday, December 20th, 2007 at 10:45 pm and is filed under Manufacturing in the U.S., Holding China Accountable, Currency Manipulation, Enforcing Trade Laws. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.