Wednesday, March 24, 2010

Trade Crisis with China to Escalate - US Likely to Label China a 'Currency Manipulator'

People's Daily, China
The US Treasury Department is highly likely to label China a currency manipulator in a report due out in mid-April, but the move will be "more symbolic than substantive" to win mid-term Congressional elections in the fall, former US trade representative Susan Schwab told China Daily on Tuesday.
"There is a high possibility, definitely (that China will be labeled as a manipulator), but it is very important to remember the decision is largely symbolic and does not force any actions, other than consultations," she said.
If that were the case, it will be the first time in 16 years. By declaring China a currency manipulator, the US could slap additional tariffs on imports from the country.
Some Chinese experts strongly doubt the US will do so as it will provoke Beijing and jeopardize its most important trade relationship, while others believe that even if China were declared a currency manipulator, Washington will not follow up with punitive measures.
Some Democrats and Republicans in the House have urged the Barack Obama administration to label China a currency manipulator. Lawmakers from both parties in the Senate also demand Washington force Beijing to revalue the yuan.
Schwab said "a significant growing number" of Democrats are increasingly pushing protectionist solutions, which she said was unfortunate.
"This is a very difficult decision (for the US government) to make. It is under a lot of pressure on the high unemployment rate and the coming election this fall."
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