China’s Currency Policy Negatively Impacting Agriculture & Manufacturing

CNN Money reports that the debate in Congress over China’s currency policy has lawmakers lining up to defend two key economic constituents — manufacturing and agriculture — that are on different sides of the issue. In a recent hearing on Capitol Hill, two Democratic representatives from Ohio, Tim Ryan and Jon Boccieri, argued that China has manipulated its currency for years to gain a competitive advantage over U.S. manufacturers, in violation of trade laws, leading to thousands of American jobs lost, further damaging the economy.

According to Boccieri, the policy has resulted in the loss of between 1.5 million and 3 million U.S. manufacturing jobs, while the nation’s trade deficit with China has grown to over $220 billion a year.

The Democrats called on Congress to pass the Currency Reform for Fair Trade Act. The bill, sponsored by Ryan, would direct the Commerce Department to treat undervalued currencies as a prohibited subsidy under World Trade Organization guidelines. The goal is to encourage China to allow its currency to float freely according to market forces.

But two Republican lawmakers called for a more measured approach, saying overly aggressive legislation could put the nation’s agriculture industry at risk. ◆