China's Exchange Rate Peg : Economic Issues and Options for U. S. Trade Policy

By Morrison, Wayne

Book Id: WPLBN0000202481
Format Type: PDF eBook
File Size: 0.2 MB
Reproduction Date: 2008

Title:	China's Exchange Rate Peg : Economic Issues and Options for U. S. Trade Policy
Author:	Morrison, Wayne
Volume:
Language:	English
Subject:	Government publications, Legislation., Government Printing Office (U.S.)
Collections:	Government Library Collection
Historic Publication Date:
Publisher:	Government Printing Office


Citation APA MLA Chicago Morrison, W. M. (n.d.). China's Exchange Rate Peg : Economic Issues and Options for U. S. Trade Policy. Retrieved from http://gutenberg.cc/

Excerpt
Excerpt: The continued rise in the U.S.-China trade imbalance and complaints from U.S. manufacturing firms and workers over the competitive challenges posed by cheap Chinese imports have led several Members to call for a more aggressive U.S. stance against certain Chinese trade policies they deem to be unfair, such as China’s policy of pegging its currency (the yuan) to the U.S. dollar. Some Members assert this policy constitutes a form of “currency manipulation” intended to give China an unfair trade advantage and is contributing to the loss of U.S. manufacturing jobs.

Table of Contents
Contents U.S. Concerns About China’s Currency Peg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 China’s Concerns About Abandoning Its Currency Peg . . . . . . . . . . . . . . . . . . . . 2 The Economics of Fixed Exchange Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 How the Peg Operates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Pros and Cons of a Peg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 A Critique of Various Estimates of the Yuan’s Undervaluation . . . . . . . . . . 8 Trends and Factors in the U.S.-China Trade Deficit . . . . . . . . . . . . . . . . . . . . . . 13 Economic Consequences of China’s Currency Peg . . . . . . . . . . . . . . . . . . . . . . . 18 Implications of the Peg for China’s Economy . . . . . . . . . . . . . . . . . . . . . . . 18 Implications of the Peg for the U.S. Economy . . . . . . . . . . . . . . . . . . . . . . . 19 Effect on Exporters and Import-Competitors . . . . . . . . . . . . . . . . . . . . 19 Effect on U.S. Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Effect on U.S. Consumers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 U.S.-China Trade and Manufacturing Jobs . . . . . . . . . . . . . . . . . . . . . 21 Net Effect on the U.S. Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 The U.S.-China Trade Deficit in the Context of the Overall U.S. Trade Deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Policy Options for the Peg and U.S. Trade Policy with China . . . . . . . . . . . . . . 25 Changes to the Peg and Potential Outcomes . . . . . . . . . . . . . . . . . . . . . . . . 26 Policy Options to Induce China to Reform the Peg . . . . . . . . . . . . . . . . . . . 28 Diplomatic Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Utilize Section 301 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Utilize the Dispute Resolution Mechanism in the WTO . . . . . . . . . . . 29 Utilize Special Safeguard Measures . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Other Bilateral Commercial Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Legislation in the 109th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 List of Figures Figure 1. Real and Nominal China-U.S. Exchange Rate . . . . . . . . . . . . . . . . . . . 5