US Congress investigates Chinese 'currency manipulations'

John Shovelan, Washington

Last Updated: Fri, 20 Nov 2009 13:42:00 +1100

Members of the United States Congress have asked the Commerce department to investigate allegations that the government of China manipulated its currency, the Renminbi.

Congress also wants the commerce department to see if China's refusal to allow its currency to appreciate amounts to a form of subsidy.

It's also looking at new legislation that would pressure the Chinese to lift the value of the Yuan.

Members of Congress, from both major parties, are frustrated by China's steadfast refusal to allow the value of the Yuan to rise.

"They give their back of the hand to the world economy," said one Democrat.

"I just think it's time to get the, get the stick out," said a Republican.

The first stick is the request to the commerce department effectively seeking a ruling on whether China's currency link to the US dollar is a form of protectionism.

Democrat Senator Charles Schumer says it is costing American jobs.

"Today there are certainly hundreds of thousands and maybe even more Americans who are out of work because the Chinese are unfair and manipulate their currency," he argued.

Senator Schumer believes there should be tariffs on Chinese imports in retaliation.

"Nothing is more important than this," he said.

Unemployment pressure

Growing Congressional pressure on China is part of a broader effort to do something about unemployment in the United States.

A new OECD forecast says the US unemployment rate, now at 10.2 per cent, will not peak until it hits 10.9 per cent.

The jobless are now driving a second wave of home foreclosures. And the proportion of home owners with a mortgage who are either behind on their payments or in foreclosure hit a record high for the ninth straight quarter.

Republican Senator Sam Brownback says, given the state of the US economy, it is understandable the greenback is weakening but he says the Chinese currency should be strengthening.

"No appreciation, none. They have pegged their currency to ours at a time when our currency is falling and you can see reasons for why it would fall, that the Chinese currency should clearly be going up against that," he said.

But the Treasury Secretary, Timothy Geithner, says he believes members of Congress will not have to wait long before China does allow its currency to appreciate.

"I think it will change over time, and my own sense is it's not going to actually take that much time."

Meanwhile, a separate report to the congress by the US-China Economic and Security Review Commission found China was the largest culprit in malicious cyber incidents involving the Department of Defence.

It also found that China has launched an effort to influence US think-tanks and academics by granting visas to scholars with sympathetic views of the Chinese government and refusing them to more critical voices.