Despite Beijing's announcement that it would raise the rate of its currency, several U.S. lawmakers are still calling for a bill that treats "undervalied" currencies as an unfair trade subsidy under U.S. trade law. From Reuters:
Leading critics of China's currency policy used a Senate Finance Committee hearing focusing on US-China trade to vent frustration - already seen in world financial markets - that Beijing's weekend promise of currency flexibility will not produce the rapid gains its trading partners would like.
"They take a step forward, and then a step back. It's the same pattern we have seen for years," Democratic Senator Charles Schumer told the hearing.
He noted that the yuan rose only 0.02 percent on Wednesday, the third trading day after China's central bank said it would allow greater flexibility for the currency. That move brought the overall gain since the announcement to just 0.2 percent.
"The Chinese will keep treating us like they have us on a yo-yo unless we make a serious push for our legislation," Schumer said.
Meanwhile, in Business Week, Peter Coy offers his suggestions of how to smooth the U.S.-China economic relationship:
There's no easy solution that will suddenly make the superpowers synergistic. Americans blame China for not letting the yuan rise significantly, for not enforcing U.S. patents, for not putting American-made products on an equal footing with Chinese ones. China blames the U.S. for not putting its own fiscal house in order. Beijing fears that any rapid policy change would spur domestic unemployment and social instability. As China grows, U.S. influence shrinks. "What we're finding is that the United States is bumping up against the limits of the tools that it's had available," says Evan A. Feigenbaum, a Deputy Assistant Secretary of State in the George W. Bush Administration who heads the Asia practice at the Eurasia Group, a New York-based consultancy.
The U.S. can't just ignore China. It's the fastest-growing major economy in the world, at around 10 percent annually since the mid-'90s. The U.S.-China Business Council points out that exports of U.S. goods to China have risen 330 percent since 2000, vs. an increase of just 29 percent to the rest of the planet. And cheap imports from China have held down the U.S. cost of living.
What, then, can the U.S. do to get the most out of its economic links with China?
For background on the debate over China's currency revaluation, Reuters has put together a website dedicated to the issue, with timelines, charts, videos, news, analysis, and more.