Obama says China is “Gaming the Trading System”
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October 7, 2011 TheFreshOutlook  |
President Obama accuses China of “gaming” trade through a low currency rate as Senate formulates bill with retaliatory tariff measures.
US President Barack Obama has implied that China has manipulated international trade through purposefully maintaining the Chinese currency, known as the yuan, at a low level.
“China has been very aggressive in gaming the trading system to its advantage and to the disadvantage of other population of other countries, particularly the United States,” said Mr Obama.
“And that makes their exports cheaper, and that makes our exports to them more expensive.”
However, the president stopped short of backing a proposed bill, currently being debated in the US Senate, which would make it easier to place tariffs on Chinese goods. The bill was due to be voted on yesterday but was delayed until Tuesday after disagreements between senators on the bill’s contents.
The Republican party seems more cautious about taking such action, with House Leader John Boehner saying that it could initiate a trade war.
Beijing also expressed concern at the bill and accused the United States of breaking WTO rules on international trade.
“By using the excuse of a so-called ‘currency-imbalance’, this will escalate the exchange rate issue, adopting a protectionist measure that gravely violates WTO rules and seriously upsets Sino-US Trade relations,” said a Chinese government spokesperson.
However, the Alliance for American Manufacturing says that an appreciation of the Chinese currency could help to create millions of new jobs in the US. It could also significantly contribute to lowering the US’ large trade deficit.
Such sentiments were clearly at the forefront of Democratic Senator Chuck Schumer’s thinking when he argued that the consequences of inaction would have a terminal effect on any US recovery.
“We cannot continue to let China flaunt the rules. We may never recover as a country. This is serious stuff,” said Senator Schumer.
By Dermot Tobin
[Image courtesy of Mr T in DC]
