The U.S. Treasury Department on Thursday released its semiannual Report to Congress on International Economic and Exchange Rate Policies and concluded that the renminbi remains undervalued, but did not cite China for currency manipulation. The reason, of course, was China’s June 19th announcement that it would allow its exchange rate to be more responsive to market forces. The report went on to say that “What matters is how far and how fast the renminbi appreciates…We will closely and regularly monitor the appreciation of the renminbi.”

The National Association of Manufacturers has long held that the Chinese currency is a major factor in our trade imbalance with China and was a contributing factor to the global imbalances that have yet to be fully righted after the recent financial crisis. We have urged the Administration to engage with our trading partners and use every multilateral opportunity to press China to end its persistent currency undervaluation. We have also worked with our counterpart organizations in other countries to make the same case to their governments.

This is exactly what happened in recent months as governments from around the globe spoke out about the need for China to allow for a more market-determined currency value. Recognizing that is also in its own interest, China took the important step of moving away from its dollar peg in June. But Secretary Geithner is correct — how much China allows the renminbi to appreciate is key. The next Treasury report is due to Congress in October, and that is ample time to see enough movement in the currency to determine if the Chinese government is serious about correcting its significant undervaluation. Treasury is monitoring and we are all watching.

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.

From The Washington Post, “Trade Groups Seek More Limited Plan to Regulate Derivatives Market“:

While government officials are seeking to rein in the excesses that contributed to the financial crisis, business lobbyists have been warning key lawmakers that companies such as Ford, Johnson & Johnson and Coca-Cola could suffer if the new regulations are far-reaching. …[snip]

The Coalition for Derivatives End-Users, organized by groups such as the U.S. Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers, sent a letter to lawmakers last week saying that “some reform proposals would place an extraordinary burden on end-users of derivatives in every sector of the economy — including manufacturers, energy companies, utilities, healthcare companies and commercial real estate owners and developers.” The letter was signed by more than 170 companies and trade associations.

Here’s the coalition’s letter.

From Reuters, “U.S. groups eye second Obama decision on China yuan“:

WASHINGTON (Reuters) – U.S. labor and manufacturing groups urged President Barack Obama on Tuesday to live up to his campaign rhetoric and formally label China a currency manipulator in a Treasury Department report due out next week….[snip]

The largest U.S. manufacturing group, the National Association of Manufacturers (NAM), also wants Obama to designate China a currency manipulator to increase pressure within the International Monetary Fund on Beijing.

“A lot of people were surprised they didn’t cite China before. NAM’s view is that if the U.S. doesn’t cite China under the law, then it is unlikely that the IMF is going to do so,” said Frank Vargo, vice president for international economic affairs at the manufacturers’ association.