Surprise! Clinton, Obama Back China Currency Bill

♠ Posted by Emmanuel in ,, at 5/02/2008 04:07:00 PM
I'm actually quite curious what would happen if the US Congress passed one of these China currency manipulation bills. As we all know, a two-thirds majority in both houses is required to override a presidential veto which will surely come if a China currency manipulation bill is passed in Congress. Clearly, the maths work against any putative China bashing legislation; witness the non-events known as Ryan-Hunter and Baucus-Grassley-Schumer-Graham. But, don't let this fact faze you as there is yet another China currency manipulation bill waiting in the wings: Stabenow-Bunning. I will spare you its details as it is the same old story: Section 301 is fun. There may be a potentially new wrinkle with this one though as it will be deliberated near the time of the US presidential elections. Reuters reports below that both Democratic presidential candidates Hillary Clinton and Barack Obama--a signatory of the "China Currency Coalition," by the way--back Stabenow-Bunning.

My opinion on the matter of Chinese currency manipulation remains the same: many Americans apparently do not appreciate the big favour China does them by propping up a currency unloved by the world. Those McMansions and SUVs as well as the Iraq invasion have all been bankrolled by the burghers of Beijing. Yes, Chinese efforts to meddle with the USD/CNY are on an unprecedented scale. It is arguable though that China is just another in a long line of scapegoats for what ails America. Blame the furriners always works a treat as a vote-getting platform; we're not at fault here, it's those dratted furriners causing all the trouble. Given the astonishing size of global economic imbalances, I actually think the passage of one of these bills would be just the ticket to start reducing these imbalances. However, I think that the authors of these bills and their supporters will find the US will lose out more than China. Europe, not the US, is China's largest trading partner, and there are many developing markets where China can sell its wares. The US needs China more than China needs the US.

To fix one thing--crazy huge global economic imbalances, and clarify another--see who's top dog in the global political economy, I urge the US Congress to bash China as hard as possible. Go ahead; pass a China currency manipulation bill. It will make you feel good. However, I suspect that doing so will only demonstrate my tongue-in-cheek conviction that offending the Chinese will only demonstrate who the real owners of America are. It should be interesting to watch what happens when Sammy the Beggar throws his cup at the head of Mao the Multitrillionaire. Yuan blood? You've got it:

Democratic presidential candidate Barack Obama said on Thursday he supported a Senate bill to offset China's "currency manipulation," one day after his rival Hillary Clinton added her name to the list of legislation's co-sponsors. "The Bush administration has failed to act on China's currency manipulation," Obama said in a statement endorsing legislation proposed by Sen. Debbie Stabenow, a Michigan Democrat, and Sen. Jim Bunning, a Kentucky Republican. "This is unacceptable and allows China to continue inaccurately valuing its goods in a manner that mirrors a subsidy," Obama said.

The Stabenow-Bunning bill would define currency manipulation as a subsidy under U.S. trade laws, opening the door for the Commerce Department to impose countervailing duties on a broad array of Chinese goods. Individual companies or industries would still have to petition for the relief before duties are imposed.

"This bill would allow a domestic producer harmed by this practice to seek redress through our fair trade laws," Obama, a Democratic senator from Illinois, said. "That is why I co-sponsored the Currency Exchange Rate Oversight Reform Act earlier this year, and that is why I am co-sponsoring the Fair Currency Act today," he said.

Clinton, a Democratic senator from New York, signed on as co-sponsor of the legislation on Wednesday. The two senators are in a tight race for their party's presidential nomination, with a pair of state contests in Indiana and North Carolina on Tuesday.

A U.S. manufacturing group said they hoped Obama and Clinton's support for bill would jump start currency legislation in Congress, which has been stalled after a spurt of activity in the Senate Banking Committee and Senate Finance Committee last year.

"Domestic manufacturing has been pressing hard for passage of these bills and it looks like our message is beginning to be heard," said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition.