America’s manufacturers need aggressive support from the Export-Import Bank (Ex-Im), and under its chairman, Fred Hochberg, we are increasingly getting just that. Today’s Financial Times reports that Ex-Im is going to match China’s rules-busting offer to finance locomotives to Pakistan. China doesn’t follow the export financing rules agreed by major exporters (the OECD credit guidelines), even though it is now the world’s largest exporter. Instead, it uses its non-membership in this agreement to undercut others’ exports.

Ex-Im’s decision to provide matching U.S. financing for American locomotive manufacturers is extremely important in showing that the United States will not sit by and allow China to flout the rules. It is also important in that it shows Chairman Hochberg’s willingness to move quickly and decisively to support American exports more generally.

China, which gains so much from its undervalued currency, must not be allowed to compound that by providing subsidized financing to further tilt the playing field. It would be much better for China to announce it recognizes its global responsibility and that it will join in following the same rules as other major players. But as long as it doesn’t, Ex-Im needs to continue matching China in every transaction possible.

Ed Silverstein, TMCNet, “Manufacturers Meet with U.S. Officials on Intellectual Property Theft Problem“:

Representatives from the National Association of Manufacturers (NAM) met in person with U.S. Intellectual Property Enforcement Coordinator Victoria Espinel in Illinois to discuss the growing problem of intellectual property theft.

Manufacturers talked with Espinel on Oct. 8, about the challenges and solutions for protecting intellectual property rights.

Associated Press, “Administration Delays China Currency Report“:

U.S. manufacturers believe China’s currency is undervalued by as much as 40 percent, making U.S. goods more expensive in China and Chinese goods cheaper and thus more competitive in the U.S. market.

Frank Vargo, vice president for international affairs at the National Association of Manufacturers, said his group would like to see a much more rapid appreciation of China’s currency than 1 percent per month. He said one of the dangers is that after the upcoming meetings, China could revert to little or no further currency appreciation.

“The heat is on until the meetings, but the question is what will China do after the meetings,” Vargo said.

Morton Kondrake, “Infrastructure pushed by Obama, but too late,” citing the Brookings Institution’s Bill Galston, a former domestic policy advisor it the Clinton White House: (continue reading…)

This Senate Finance Committee hearing set for Wednesday ,”The U.S. – China Trade Relationship: Finding a New Path Forward is timely given China’s announcement on Saturday that it was going to allow its currency to rise. The only two witnesses listed so far are Commerce Secretary Gary Locke and U.S. Trade Representative Ron Kirk.

China’s announcement certainly shook things up. On Friday, this was AFP’s lead: “OTTAWA (AFP) – – China’s controversial currency policy will be discussed at an upcoming G20 summit, a Canadian official said Friday, despite an earlier warning by Beijing not to bring up the yuan issue.”

On Sunday, AFP’s report was, “Chinese yuan under scrutiny before G20 meeting“:

BEIJING/WASHINGTON – Policymakers in the world’s major economies will closely monitor the Chinese yuan this week for signs it is actually moving after Beijing announced it would make its exchange rate more flexible.

The Group of 20 nations will meet in Canada next weekend to hash out a course for the future as the world gradually emerges from the worst financial crisis since the 1930s.

China is a member of the G20, which holds its semi-annual meeting starting Saturday in Toronto, but is NOT a member of the G8, which precedes the meeting with sessions at Muskoka in Ontario’s cottage country .

News accounts, reaction:

• AP, China lets yuan float, warns move won’t fix global economy
• Reuters, Germany welcomes Chinese move on yuan flexibility
• Channel News Asia, “No major yuan revaluation despite China’s currency reform pledge: analysts“
• Economic Times, “Renminbi appreciation won’t benefit India: Lewis Wan” (Wan is Chief Investment Officer, The Pride Group)
• Reuters, “Chinese yuan under scrutiny before G20 meeting“

From The San Francisco Chronicle, “JP Morgan: Global Manufacturing Growth Hits A 70-Month High“:

It’s not just the U.S. and China that are experiencing record manufacturing activity growth. The entire world is rebounding hard, with JP Morgan’s Global Manufacturing PMI index hitting a 70-month high in March.

JP Morgan: Growth of production and new orders regained most of the momentum lost in February, while global trade volumes rose at a survey- record pace. Output growth will remain strong in coming months, as the manufacturing boom enters a new phase in which companies raise output to align the rate of inventory accumulation with the growth of sales.”

Bloomberg, “Manufacturing From China to U.S. Expanding in Global Recovery“:

April 2 (Bloomberg) — Factories from China to the U.S. accelerated in March, pointing to a rebound in international trade that is contributing to a global economic recovery.

Manufacturing in China grew for a 13th month and U.S. factories expanded the most since July 2004, reports showed. Business sentiment in Japan rose to the highest since 2008, while factories in Britain and the euro region stepped up production.

Surging economic growth in China is helping pull the global economy out of its worst slump in more than six decades and benefiting companies from Honeywell International Inc. in the U.S. to Germany’s Bayerische Motoren Werke AG.

The ISM Report figured in many of the stories: “Economic activity in the manufacturing sector expanded in March for the eighth consecutive month, and the overall economy grew for the 11th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business®.”

• Kansas City Star, “March survey of regional manufacturing industries shows promising signs”
  Bloomberg, “U.K. Factory Index Rises to 15-Year High on Exports (Update1)”
  Ottawa Citizen, “United States. Manufacturing sector expands in March“

Washington Post, “Geithner asserts ‘critical role’ of manufacturing“:

U.S. Treasury Secretary Timothy F. Geithner used a trip to a Pittsburgh metals factory on Wednesday to buff the image of American manufacturing ahead of a key decision on China’s currency policy, showcasing the type of heavy industry that can succeed in the United States despite stiff — and some argue unfair — competition from abroad.

“This is a sector that will play a critical role in helping to spur our economic recovery and contribute to our long-term prosperity,” Geithner said after a day in which he toured a mill where Allegheny Technologies Inc. produces specialty metal plates. He also met with representatives of United Steelworkers and U.S. Steel.

• Treasury News Release, “Secretary Geithner’s Remarks at the United Steelworkers“
• AP via Washington (PA) Post-Observer, “Treasury secretary tours local steel mill“
• Pittsburgh Post Gazette, “Treasury chief boosts policy on banks bailout, China trade“
• Pittsburgh Tribune-Review, “Geithner rallies steelworkers“
• Wall Street Journal, “Geithner Promises More Infrastructure Spending“
• Reuters, “Treasury’s Geithner says US economy slowly on mend”

BTW, on Monday, Allegheny Technologies announced a $5 million one-time, non-cash tax charge because of the new health care law. None of reports mention the charge, bu then Geithner’s trip had many news angles.

Los Angeles Times, “In China, Obama’s hosts show no signs of budging“:

Not only is the U.S. president coming away without any definable concessions, but the Chinese appeared to be digging in their heels.

On Tuesday, just hours after Obama stood with President Hu Jintao in the Great Hall of the People, praising China’s commitment to “move toward a more market-oriented exchange rate over time,” a senior Chinese official called a news conference across town to issue a rebuttal.

“We maintained a stable yuan during the financial crisis, which not only helped the global economy but also the stability of the world’s financial markets,” He Yafei, deputy foreign minister, said, adding that it was too soon since the worldwide financial crisis to talk about a change of strategy.

• Christian Science Monitor, “Obama bids China farewell with Great Wall tour, modest expectations“
• Washington Post, “In Obama’s China trip, a stark contrast with the past“
• Dallas Morning News, “Obama, Chinese president low key in talks”

The Nightly Business Report last night covered President Obama’s meetings in Beijing, including important issues involving trade and currency. Darren Gersh reported, and NBR has already posted a transcript. Excerpt:

GERSH: American exporters argue the yuan is kept artificially undervalued in order to boost Chinese exports, a complaint President Obama will raise in Beijing. But Win Thin [senior currency strategist, Brown Brothers Harrisman] expects Chinese leaders will not allow the yuan to budge until the financial crisis is safely behind them, meaning next summer at the earliest. Even so, the Chinese are aware a loose yuan policy may overheat their economy.

THIN: Where does all that liquidity go? It does go to buying goods. It goes to buying — perhaps into investing in plants and infrastructure. But a lot of it is going into asset markets. The property market is approaching bubble territory. Equity markets are very frothy. So I think the policy makers are concerned.

GERSH: Trade expert Dan Griswold is somewhat less concerned. He argues U.S.-China trade has provided stability to the global economy.

DANIEL GRISWOLD, CENTER FOR TRADE POLICY, CATO INSTITUTE: Part of the rebound in east Asia is countries ability to export to China and to hitch their wagon to China’s continued strong growth. So I think it is in China’s interest to liberalize its currency, but I don’t see any crisis.

GERSH: While many U.S. manufacturers would like to see China boost its currency, they are not expecting rapid results. At the National Association of Manufacturers, Frank Vargo thinks the Chinese aren’t quite sure how to settle this currency debate.

FRANK VARGO, VP INTERNATIONAL, NAM: And I think within the Chinese government there are different schools of thought. There are the old- liners from the industry ministries who say you just can’t do this. And there are those I think from the financial ministry who say we’ve got to do it.

A more complete transcript for the evening broadcast is also posted here. Quick work!