The New York Times reports that Tim Geithner, the nominee to be U.S. Secretary of Treasury, said in written responses to Senate Finance Committee inquiries that he believed China manipulates its currency. From the story, “Geithner Hints at Harder Line on China Trade“:
“President Obama — backed by the conclusions of a broad range of economists — believes that China is manipulating its currency,” Mr. Geithner wrote. He stopped short of charging that China is manipulating its currency intentionally to gain an unfair trade advantage, as the 1988 law requires for an official citation of currency “manipulation.”
The Times considers this page one news, seeing it as indication of a harder policy line against China’s economic policy. The NAM’s Frank Vargo, vice president for international economic policy, comments:
The National Association of Manufacturers, whose members have pushed previous administrations to get tougher with China, was pleased, but also cautious given the potential for a confrontation that could exacerbate global woes.
“You know the world has changed a lot with the financial crisis and China has a lot in U.S. Treasuries,” said Frank Vargo, vice president for international economic affairs at the manufacturers’ association. “This needs to be done in a cooperative, not a confrontational, way.”
You would certainly hate to see President Obama repeat the mistakes of President Hoover and sign legislation that sparks a destructive round of protectionism worldwide.
UPDATE (9:45 a.m.): Wall Street Journal also reports, “U.S. Stance on the Yuan Gets Tougher“:
“You don’t want to be the bull in the China shop when it comes to currencies right now,” said Frank Vargo, a vice president of the National Association of Manufacturers, which has long lobbied against China’s yuan policy. “But…we all know the Chinese currency is deliberately undervalued
Or, as the new year dawns, ox in the China shop.
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