U.S.-China Commission Report Issued Today
Posted by SCapozzola on November 19th, 2009
Amidst a U.S.-China trade deficit that continues to climb each year, and topped a whopping $268 billion last year, the U.S.-China Economic and Security Review Commission (USCC) issued its latest report to Congress today.
To discuss the report’s findings, USCC Chair Carolyn Bartholomew will join Institute for America’s Future president Robert Borosage and Economic Strategy Institute president Clyde Prestowitz on a news conference call at 1 pm ET today. The group will also assess President Obama’s trip to Asia.
Details for the call: dial 877.551.8082. Code is CAF Call.
AAM Executive Director Scott Paul praised the Commission’s efforts, stating, “I hope that every Member of Congress and Senator reads this report thoroughly. China continues to break its commitments, and we bear the price in lost jobs. This report is a clear call to action. I commend the commission.”
Among the key findings of the USCC report was a rather blunt assessment of Beijing’s ongoing policy of currency manipulation:
Alone among the world’s major economies, China refuses to allow the renminbi (RMB), its currency, to respond to free market movements. China’s leaders instead keep the currency trading at an artificially low level in order to suppress export prices—a deliberate violation of the rules of the International Monetary Fund, of which it is a member. As a result of this and other factors, China’s current account surplus with the United States and the rest of the world soared and added to China’s record foreign exchange reserves of nearly $2 trillion when this Report was completed.
Key conclusions of the report include:
• China’s trade surplus with the United States remains large, despite the global economic slowdown. Since China joined the WTO in 2001, the United States has accumulated a $1.16 trillion goods deficit with China.
• The U.S. current account deficit causes considerable anxiety among both economists and foreign investors who worry that future taxpayers will find it increasingly difficult to meet both principal and interest payments on such a large debt.
• China continues to violate its WTO commitments to avoid trade distorting measures.
• Over the past year, China has adopted a battery of new laws and policies that may restrict foreign access to China’s markets and protect and assist domestic producers.
• The significant expansion of the Chinese government’s involvement in the international economy in general and in the U.S. economy in particular has concerned many economists and government officials due to uncertainty about the Chinese government’s and the Chinese Communist Party’s motivations, strategies, and possible impacts on market stability and national security.
• There is concern that the Chinese government can hide its ownership of U.S. companies by using stakes in private equity vehicles like hedge or investment funds.
• China’s foreign exchange reserves continue to grow, while its management of the exchange rate has given it monopoly control on outward flows of investment.
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