Statement by National AFL-CIO President Richard Trumka On the U.S. Treasury Department's Announcement on Chinese Currency

We are disappointed by the Treasury Department's recent announcement that it will not designate China a currency manipulator in its semi-annual report. 

This announcement ignores the overwhelming evidence, including that in Treasury's own report, that the Chinese government has systematically intervened in currency markets over many years to keep the renminbi (or yuan) undervalued by as much as 40%.  

American Workers and businesses are paying a steep price every day for our government's failure to act decisively in this enormously important area. 

Chinese workers also suffer reduced purchasing power from the undervaluation of the renminbi.

At a time when our economy is more than 10 million jobs short of pre-recession unemployment levels, and when we are focused on boosting exports to create jobs, we simply cannot afford to look the other way as the Chinese government continues to manipulate its currency for an unfair trade advantage.  

The Chinese government's vague announcement a few weeks ago that it will allow its currency to fluctuate slightly has not been followed by concrete and significant progress. Our government must not accept this token gesture in lieu of action.    

We strongly urge Congress to act swiftly to enact S. 3134 - the Currency Exchange Rate Oversight Reform Act of 2010 - which would give our government the tools and resolve it needs to address currency manipulation. 

We should also keep on the table all options - including action at the World Trade Organization and use of our trade statutes - to pressure the Chinese government to take appropriate action to revalue its currency.

Labeling China’s Currency Undervalued Correct/USW Calls For More Action

(PITTSBURGH, PA.) – The United Steelworkers - the largest industrial Union in North American, which represents 850,000 workers in metals, rubber, chemicals, paper, oil, atomic energy, forestry and other industries in North America – says the U.S. Treasury designating Chinese currency as undervalued is a small step in the right direction. 

The undervalued yuan, also called renminbi, artificially depresses the cost of Chinese products and falsely increases the price of American goods, USW Officials said.  The resulting lopsided trade has closed American factories and cost American jobs. 

“The administration is correct in calling the renminbi undervalued,” USW President Leo Gerard, said. “The next crucial step is to do something about it.”

The USW supports legislation that would punish China for currency manipulation sponsored in the Senate by Sen. Chuck Schumer (Democrat-New York) and others and in the House by U.S. Representative Tim Ryan (Democrat-Ohio) and others.

China undervalues its currency by using renminbi to buy dollars.  China now holds $2.4 trillion in U.S. currency.  Even conservative economists agree that the renminbi is undervalued as a result by between 25% and 40% against the dollar.  As a result, U.S. products sold in China are as much as 40% overpriced, and Chinese companies benefit because their products are artificially discounted by as much as 40%when sold in the U.S.  That price break for Chinese companies has enabled them to sell products so cheaply in the U.S. that efficient and productive American firms, including paper and steel pipe manufacturers, fall victim to the distorted market and are forced to close. T he currency manipulation also swells the U.S. trade deficit with China, making the U.S. increasingly indebted to the Asian country.

In 1960, before the U.S. opened trade with China, manufacturing accounted for a quarter of the U.S. gross domestic product (GDP) and employed 26% of the Labor Force.  Now, after giving China most favored nation trade status and a series of counterproductive trade deals including NAFTA, U.S. manufacturing is 11% of GDP and accounts for under 10% of total employment.  More than two million factory workers have lost their jobs in the past three years.

“President Obama’s goal of doubling exports within five years will be impossible to meet if illegitimately undervalued Chinese currency continues to force American manufacturers out of business,” Gerard said.

Under pressure from the U.S. to allow its currency to be valued naturally on international markets, China announced in June that it would establish a more flexible exchange rate policy. However, since then the renminbi has appreciated less than 1% against the dollar.

“When you consider that it’s undervalued by as much as forty-percent, that one-percent is meaningless,” Gerard said.

The Treasury Department has described China’s announcement that it would permit the renminbi to float up on international markets as a “significant development” that the U.S. would closely and regularly monitor. 

“If China prevents the value of the renminbi from appreciating dramatically against the dollar before the next Treasury report on currency is due October fifteenth, then the Treasury must name China as a currency manipulator and take the next steps that are crucial to balance the currency and preserve American manufacturing,” Gerard said.