Overseas voices

“China’s currency policy not to blame”China is currently in an advantageous position regarding the global debt situation， and for the West it might be better to concentrate on rethinking its own economic policies rather than focusing so much on the Chinese currency issue.I’m not very happy with the currency policies of the People’s Republic of China， but on the other hand I think we should not hide behind this allegation when it comes to our own structural weakness.Let’s be honest， why can [China] be so strong in their positioning?They are the largest and most important holders of foreign currency around the world. So let’s be realistic of this， and as I said I’m not happy about their currency policies and I’m convinced that it will gradually change - it should change quicker， mind you， but this is not the only reason behind our problems.On long-term solutions to the developed world’s lagging economic growth， countries like Germany and the United States should concentrate most upon is embracing not just financial reform but also a sense of competition.What must be expected from each and every country in the European Union and probably also from each and every state and school district in the United States is to take education and innovation as the number one priority.In addressing issues such as these， the West will produce a stronger foundation for staying competitive in an increasingly globalized world. — Werner Hoyer， Minister of State at the German Federal Foreign Office“Manufacturing truth: US may never again be a lowest-cost maker”And what if a U.S. maker of， say， steel bars used to reinforce concrete can make the case that the same product from China is underpriced because of the yuan? Maybe sanctions will make the American-made product more competitive. More likely， the business will migrate to producers in India， Malaysia or Indonesia， which will continue to under price the U.S. manufacturer.The truth is， the U.S. may never again be the lowest-cost maker of sneakers， clothing， kitchen utensils， the innards of iPhones and thousands of other goods for which inexpensive labor is key.It’s also a stretch to conclude that a weak yuan is the sole source of the yawning U.S. trade deficit with China. In the past five years — under pressure from the U.S. — China has allowed its currency to appreciate 20 percent against the dollar. And the U.S.’s trade deficit with China? It hit a monthly record of $29 billion in August.What’s more， at least half the final price of products labeled as “Made in China” goes to Americans， from retail clerks， to shippers and handlers， advertisers， engineers and designers， according to a study by the San Francisco Federal Reserve. — Bloomberg View Editorial“And now， protectionism”America has legitimate beefs with China， but this bill is the wrong way to address them. It is legally flawed， economically dangerous and unnecessary. Were it ever to reach Mr Obama’s desk， he should veto it. Start with the legal flaws. The rules of the World Trade Organisation (WTO) generally do not recognise undervalued currencies as an illegal subsidy. Currencies are considered part of a country’s monetary sovereignty， to be dealt with， if at all， by the International Monetary Fund. The odds are that if America imposed tariffs on China under the bill’s provisions， China could successfully bring a complaint against America at the WTO.By the time the WTO rules， the American firms lobbying for protection from Chinese imports will doubtless have enjoyed several years of it. But American consumers will have suffered by being denied cheap products， and China will almost certainly have retaliated. Therein lies the greatest danger. This bill would escalate tensions between China and America， and risk sparking a trade war. It is broad enough to be wielded against other countries， which may mimic America’s tactics against China or each other. It would wallop global investor and business confidence at a time when both are scarce.If jittery politicians are looking for another argument to sway sceptical voters， how about this? The problems this bill purports to address are already being resolved. The Economist has long argued that a flexible yuan is in the interests of both China and its trading partners. It would hasten the reorientation of China’s economy from exports to consumer spending， give its central bank more freedom to fight inflation， and divert demand to depressed Europe and America， catalysing an essential rebalancing of the global economy.Belatedly， China recognises this. Since June last year the yuan has appreciated 7% against the dollar. The rise in China’s relative costs has been even greater given its higher inflation rate. With stimulative fiscal and monetary policy bolstering domestic demand， China’s current-account surplus has shrunk by two-thirds， from 10% of GDP in 2007. Meanwhile America’s trade deficit has narrowed， and manufacturing employment has stopped falling. All this means the yuan is far less undervalued than it was a few years ago—if at all. — The Economist“We oppose it. It should not become law.”Legislation that would increase tariffs on imports from China is unlikely to create any incentive for China to move expeditiously to modify its exchange policies. Rather， it would likely have the opposite effect and result in retaliation against U.S. exports into China – currently the fastestgrowing market for U.S. exports. Tariff legislation would not get us closer to the goal of a market-driven exchange rate. Instead， it would highlight US unilateral action， thereby shifting the focus of the international community away from the core issue of China’s currency.Moreover， it is doubtful that U.S. action to countervail undervalued currency could meet the WTO’s standards for the application of countervailing duties (CVDs). Any legislation that requires the Commerce Department to estimate the “true”exchange rate would create a process that will be highly subjective and potentially politicized.Most importantly， such a measure will not create significant new jobs here at home. As many economists have noted and trends already show， cost increases in China due to RMB appreciation and other factors will shift production to other low-cost manufacturing countries， not back to the United States.— The American Chamber of Commerce in the People’s Republic of China (AmChamChina)The Senate bill would damage the bilateral trade and investment relationship， weaken our standing in the World Trade Organization， and damage our national interests. We oppose it. It should not become law.We call on members of Congress， instead， to press for improvement on the issues that our members have repeatedly told us matter most to them. These include urging China to expand market access for American companies across a range of industries that continue to restrict foreign investment; strengthen its protection of intellectual property; and dismantle a web of preferential policies that benefit domestic firms at the expense of their foreign counterparts， undermining genuine competition.— Ted Dean， AmCham-China Chairman“It is a jobs bill for Vietnam， Indonesia and Mexico”USCBC believes that the currency legislation passed October 11， 2011 by the US Senate will do more harm than good. USCBC continues to advocate that China needs to move faster toward a market -determined exchange rate; passing tariff legislation on imports from China will not get us closer to this goal and will hit the pocketbooks of American households at a time they least can afford it. Limiting imports from China would not mean an increase in US employment or lower the trade deficit; we’ll just shift our imports to another overseas supplier. If this is intended to be a jobs bill， it is a jobs bill for Vietnam， Indonesia and Mexico. USCBC believes that Obama administration’s approach of employing multilateral and bilateral engagement with China is the most useful way to make progress on the exchange rate issue.As we have said all along， no one disagrees that China needs to move more rapidly toward a market-oriented exchange rate. Our concerns on congressional legislation have centered around the tools used to try to reach that goal. Senator Hatch’s proposal to use multilateral negotiations on the issue - an approach that has seen progress on other issues with China - makes sense if we truly want to see this problem addressed.— Erin Ennis， Vice President of US-China Business Council(USCBC)\"This bill won’t help the U.S. economy significantly\"Shifting political dynamics and changes in rhetoric about free trade tend to play out in unpredictable ways against the background of a bipartisan desire to get tough with China. A lurking concern is that this bill won’t help the U.S. economy significantly and could instead hurt job growth if China retaliates aggressively and trade tensions compound economic uncertainty， setting back an already fragile recovery. I suspect both parties are a little concerned about supporting such legislation if it backfires.— Eswar S. Prasad， Professor of trade policy at Cornell University