WASHINGTON, DC—U.S. Senators Charles E. Schumer (D-NY)—joined by a bipartisan group of nine other senators—urged the Obama administration Tuesday to pressure the Chinese government to stop suppressing the release of an independent report that is said to conclude that China manipulates its currency to gain an unfair competitive advantage.
An annual report issued last summer by the staff of the International Monetary Fund is believed to have found that China intentionally undervalues its currency to fuel growth in the export-oriented sectors of its economy. The finding, if made public, could provide independent validation of U.S. lawmakers’ long-running complaint about China’s currency practices. But to date, the Chinese government has exercised it rights as an IMF member nation and refused to allow its report to be released, even though 90 percent of IMF countries make theirs public.
“This report could be the smoking gun that confirms what many of us already know—China has been intentionally manipulating its currency to gain an unfair trade advantage. The fact that China insists on keeping the report under wraps is reason to believe they have something to hide. The administration should press for the report’s release at next week’s summit,” Schumer said.
In a letter to Treasury Secretary Timothy Geithner, the eight senators urged the administration to use the upcoming Strategic and Economic Dialogue to pressure the Chinese to release its IMF report. The summit takes place May 24 and 25 in Beijing. Geithner and Secretary of State Hillary Clinton are expected to represent the U.S.
The letter to Geithner was signed by Senators Schumer, Lindsey Graham (R-SC), Debbie Stabenow (D-MI), Sam Brownback (R-KS), Sherrod Brown (D-OH), Susan Collins (R-ME), Russ Feingold (D-WI), Carl Levin (D-MI), Jim Webb (D-VA) and Robert Casey (D-PA).
“China’s failure to [make its report public] in 2009, despite regularly opting for transparency in previous years, is troubling, suggesting that China seeks to suppress any findings critical of China’s manipulation of the value of its currency,” the letter states.
The senators behind the letter to Geithner are also sponsoring legislation, first announced in March, that would confront China’s currency misalignment. If enacted, the bill would provide less flexibility to the Treasury Department when it comes to citing countries for currency manipulation. It would also impose stiff new penalties on designated countries, including possible tariffs on the countries’ exports and a ban on any companies from those countries receiving U.S. government contracts.
A copy of the senators’ letter to Geithner appears below.
May 18, 2010
The Honorable Timothy F. Geithner
Secretary of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220
Dear Secretary Geithner,
As a member of the International Monetary Fund, China has agreed to subject its economic and financial policies to the scrutiny of the international community. We believe China is failing to live up to this commitment and urge you to convey to the Chinese government the importance of taking a substantive step to demonstrate its willingness to participate in candid, public dialogue about its exchange rate policies and other economic matters. To that end, we propose that at the upcoming S&ED and G-20 meetings you request the Chinese government to make public the Staff Report and other accompanying analysis from the IMF’s 2009 Article IV consultations with China.
The IMF’s annual comprehensive Article IV consultations provide a frank appraisal of a country’s economic and financial policies, including an assessment of its exchange rate policies. IMF member countries have the option to make public the Fund’s assessment. The overwhelming majority – 90 percent of the 186 member countries – opt for transparency, making the extensive information in the IMF’s Staff Reports publicly available on the IMF’s website. China’s failure to do so in 2009, despite regularly opting for transparency in previous years, is troubling, suggesting that China seeks to suppress any findings critical of China’s manipulation of the value of its currency.
Mr. Secretary, in April you decided to delay publication of the Treasury’s exchange rate policy report, apparently in the hope that China might be willing to address concerns about its exchange rate policies in the context of upcoming high-level, multilateral discussions on policies that can help create a stronger, more sustainable, and more balanced global economy. Given China’s past intransigence on exchange rate reform, we are not similarly optimistic that these high-level meetings will generate any significant breakthrough on this issue. As you know, this is one reason why we are moving forward with legislation (the Schumer-Stabenow-Graham Currency Exchange Rate Oversight Act of 2010 (S.3134)) to provide specific consequences for countries that fail to adopt appropriate policies to eliminate currency misalignment.
Nevertheless, the upcoming S&ED and G-20 meetings do present a unique opportunity for the Chinese government to demonstrate a commitment to productive talks on global rebalancing, which necessarily includes a discussion of exchange rate policies. An agreement by the Chinese government to make public the Staff Report from its 2009 Article IV consultations would be a constructive contribution to those discussions. We urge you to convey to the Chinese government the importance of taking this visible step.
Senators Schumer, Graham, Stabenow, Brownback, Brown (OH), Collins, Feingold, Levin, Webb, Casey.