U.S. House of Representatives Hear the False Exchange Rate Should Great Legislative Differences

At 22:30 p.m. Beijing time on September 15, the US House of Representatives Preparatory Committee began a two-day hearing on the RMB exchange rate issue, and U.S. Treasury Secretary Timothy Geithner will be questioned tomorrow.

It is reported that the hearing will focus on two issues: First, whether China has made "substantial" progress on the appreciation of the RMB exchange rate, whether it has classified China as a "currency manipulator", and whether it should target Chinese exports. Impose punitive tariffs and judge the impact of this policy on global recovery and employment in the United States.

Geithner said in an interview with the US media last week that China’s progress in the reform of the RMB exchange rate was “very, very slow.” He believes that China’s efforts in this area are still not enough. The media predicts that Geithner will be very tough at tomorrow’s hearing.

On September 16, the middle exchange rate of the RMB exchange rate in the interbank foreign exchange market was US$6.7181 against the US dollar, which hit a new high since the July 2005 exchange reform in the fifth consecutive trading day.

The two-day hearing will discuss the “Currency Reform Fair Trade Proposal” against the RMB exchange rate.

If the bill is passed by the National Assembly, the US Department of Commerce can obtain authorization to impose anti-dumping and countervailing duties on imported goods from China to offset the impact of the so-called "undervalued" renminbi.

Members of the U.S. Congress all believe that China’s monetary policy is “predatory”, but they have not reached an agreement on the issue of enacting special tariffs on the RMB exchange rate.

Levin, chairman of the House Committee on Fundraising Committee, said that China’s monetary policy has already violated China’s commitment when it joined the World Trade Organization in 2001. Therefore, he supports the increase of tariffs through legislation to punish China and appeal to the WTO.

John Frisbi, chairman of the US-China Business Association, also stated: "This move will bring about setbacks for Chinese companies, but it will not enable us to achieve our goals." Representative Kemp of the fundraising committee expressed his opposition to legislation on the exchange rate of the yuan.

U.S. manufacturers and trade unions support the United States in exerting pressure on China to create more jobs on exchange rates, and some agricultural groups and company lobbyists (such as Citigroup) believe that legislative measures will undermine their continued expansion in China. The benefits of the export market.

Representative Tim Murphy said that although the bill is still in the final stage of revision, he is confident that the bill can be passed before the midterm election, because he has already received more than one-third of the representatives of the House of Representatives.

The deputy director of the Institute of International Monetary Research at Renmin University of China, Xiang Songjiong, stated that compared to previous vacant cries, this hearing has “emerged unprecedentedly” in the legislative process to deal with the issue of the RMB exchange rate. However, forcing the appreciation of the renminbi cannot solve the problems of the United States.

Fan Gang, director of the National Economic Research Institute, said recently that the behavior of the US House of Representatives is not conducive to U.S. economic development. At present, what China needs to do is to increase the flexibility of the RMB exchange rate mechanism, but he hopes not to politicize the RMB issue.

Xiang Songxin believes that the purpose of the US’s forced appreciation of the renminbi is to curb the rapid growth of the Chinese economy. He said that the United States has no scientific basis for the so-called “China’s deliberately underestimating the RMB exchange rate to aggravate global trade imbalances and cause the United States high trade deficit and the United States a large number of unemployed”.

According to Ding Yifan, deputy director of the World Development Institute of the State Council Development and Research Center, if the United States passes legislation and takes punitive measures against China, it will lead to a trade war. The loser will be the United States.

Xiang Songjing disagreed with this view. He believes that as China's urbanization and industrialization have just begun, the losers in the trade war will eventually be China rather than the United States.