WASHINGTON – The National Association of Manufacturers expressed strong disappointment that the latest Treasury Report to Congress did not cite China for currency manipulation. “We felt that Secretary [John] Snow’s comments in May made it very clear that China had to make a significant move in its currency’s value to avoid being cited in this report,” said NAM president John Engler. The yuan has appreciated just 0.3% since China announced a revaluation of its currency in July.
“Both President Bush and Secretary Snow have in recent weeks said that China needed to do more, and we agree. “As evidence of the effort China has made to suppress the value of its yuan, it now holds more than $700 billion in foreign exchange reserves, mostly dollars. This is a 50% increase over last year and, if the current trend continues, China will hold $1 trillion next year,” Engler said. “As far as we’re concerned,” he said, “such dollar holdings violate the International Monetary Fund rule that instructs members to ‘avoid manipulating exchange rates . . . to gain an unfair competitive advantage over other members.’ ”

He pointed out that a related IMF provision defines manipulation to include a “protracted large-scale intervention in one direction in the exchange market.”

“We have been very supportive of the Administration’s constructive engagement with the Chinese government on the currency issue but, at some point, talk must end and action must be taken. We believe that time is now. In September, Treasury Undersecretary Tim Adams accused the IMF of being ‘asleep at the wheel’ with regard to its surveillance responsibility over global exchange rates. He was right then, and nothing’s changed since.

Engler called on the Treasury Department to "take the action they would have taken had there been a citation and begin an aggressive process within the IMF to address China’s currency manipulation."

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