{ "id": "RL32165", "type": "CRS Report", "typeId": "REPORTS", "number": "RL32165", "active": false, "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department", "versions": [ { "source": "EveryCRSReport.com", "id": 344520, "date": "2008-05-22", "retrieved": "2016-04-07T03:24:40.055694", "title": "China\u2019s Currency: Economic Issues and Options for U.S. Trade Policy", "summary": "The continued rise in China\u2019s trade surplus with the United States and the world, and complaints from U.S. manufacturing firms and workers over the competitive challenges posed by 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. Among these is the value of the China\u2019s currency (the renminbi or yuan) relative to the dollar. From 1994 to July 2005, China pegged its currency to the U.S. dollar. On July 21, 2005, China announced it would let its currency immediately appreciate by 2.1% and link its currency to a basket of currencies (rather than just to the dollar). Although the yuan has appreciated 16% since 2005, many Members complain that China continues to \u201cmanipulate\u201d its currency in order to gain an unfair trade advantage, resulting in U.S. job loss. Numerous bills have been introduced to induce China to adopt a more flexible currency policy.\nIf the yuan is undervalued against the dollar (as many analysts believe), there are likely to be both benefits and costs to the U.S. economy. It would mean that imported Chinese goods are cheaper than they would be if the yuan were market determined. This lowers prices for U.S. consumers and dampens inflationary pressures. It also lowers prices for U.S. firms that use imported inputs (such as parts) in their production, making such firms more competitive. When the U.S. runs a trade deficit with the Chinese, this requires a capital inflow from China to the United States, such as Chinese purchases of U.S. Treasury securities. This, in turn, lowers U.S. interest rates and increases U.S. investment spending. On the negative side, lower priced goods from China may hurt U.S. industries that compete with those products, reducing their production and employment. In addition, an undervalued yuan makes U.S. exports to China more expensive, thus reducing the level of U.S. exports to China and job opportunities for U.S. workers in those sectors. However, in the long run, trade can affect only the composition of employment, not its overall level. Thus, inducing China to appreciate its currency would likely benefit some U.S. economic sectors, but would harm others. U.S. data indicate that in 2008, imports from China have slowed significantly and that import prices have risen sharply. Some economists are now concerned that the overall fall in the dollar, which a stronger yuan would exacerbate, could become economically destabilizing.\nCritics of China\u2019s currency policy contend that the large and growing U.S. trade deficit with China ($256 billion in 2007) is evidence that the yuan is undervalued and harmful to the U.S. economy. However, the relationship is more complex. First, an increasing level of Chinese exports are from foreign-invested companies in China. Second, the deficit masks the fact that China has become one of the fastest growing (and is now the third largest) market for U.S. exports. Finally, the trade deficit with China accounted for 29% of the sum of total U.S. bilateral trade deficits in 2007, indicating that the overall U.S. trade deficit is not caused by the exchange rate policy of one country, but rather the shortfall between U.S. saving and investment. That being said, there are a number of reasons why a more flexible currency policy could benefit both countries. For a brief summary of this report, see CRS Report RS21625, China\u2019s Currency: A Summary of the Economic Issues, by Wayne M. Morrison and Marc Labonte.", "type": "CRS Report", "typeId": "REPORTS", "active": false, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/RL32165", "sha1": "e630ed7e84f4dd83bf27e8517bb35554346a6f39", "filename": "files/20080522_RL32165_e630ed7e84f4dd83bf27e8517bb35554346a6f39.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/RL32165", "sha1": "2a36b30fed97b2cd7af3b6943d515dd8d0eaa93e", "filename": "files/20080522_RL32165_2a36b30fed97b2cd7af3b6943d515dd8d0eaa93e.pdf", "images": null } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc820528/", "id": "RL32165_2008Jan09", "date": "2008-01-09", "retrieved": "2016-03-19T13:57:26", "title": "China\u2019s Currency: Economic Issues and Options for U.S. Trade Policy", "summary": null, "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20080109_RL32165_409fe8d003e60187a0de2400b88af05b5b2bb5b5.pdf" }, { "format": "HTML", "filename": "files/20080109_RL32165_409fe8d003e60187a0de2400b88af05b5b2bb5b5.html" } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc805279/", "id": "RL32165_2007Jul15", "date": "2007-07-15", "retrieved": "2016-03-19T13:57:26", "title": "China\u2019s Currency: Economic Issues and Options for U.S. Trade Policy", "summary": null, "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20070715_RL32165_b0edeeab6bab2c62f7c6ea0265951b61645e4911.pdf" }, { "format": "HTML", "filename": "files/20070715_RL32165_b0edeeab6bab2c62f7c6ea0265951b61645e4911.html" } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc821603/", "id": "RL32165_2007Jun28", "date": "2007-06-28", "retrieved": "2016-03-19T13:57:26", "title": "China\u2019s Currency: Economic Issues and Options for U.S. Trade Policy", "summary": "The continued rise in China\u2019s trade surplus with the United States and the world, and complaints from U.S. manufacturing firms and workers over the competitive challenges posed by 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. This report examines China's currency policy its implications.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20070628_RL32165_7827cb8c064ce9ea7dcf5fb58291fb4f0b788b72.pdf" }, { "format": "HTML", "filename": "files/20070628_RL32165_7827cb8c064ce9ea7dcf5fb58291fb4f0b788b72.html" } ], "topics": [ { "source": "LIV", "id": "Trade", "name": "Trade" }, { "source": "LIV", "id": "Foreign trade -- U.S. -- China", "name": "Foreign trade -- U.S. -- China" }, { "source": "LIV", "id": "Foreign trade -- China -- U.S.", "name": "Foreign trade -- China -- U.S." }, { "source": "LIV", "id": "Foreign exchange", "name": "Foreign exchange" }, { "source": "LIV", "id": "Balance of trade", "name": "Balance of trade" }, { "source": "LIV", "id": "International finance", "name": "International finance" } ] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc810989/", "id": "RL32165_2007Apr24", "date": "2007-04-24", "retrieved": "2016-03-19T13:57:26", "title": "China\u2019s Currency: Economic Issues and Options for U.S. Trade Policy", "summary": null, "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20070424_RL32165_74f75432b1a9873877c9c913dd1ea174805c30e4.pdf" }, { "format": "HTML", "filename": "files/20070424_RL32165_74f75432b1a9873877c9c913dd1ea174805c30e4.html" } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc819843/", "id": "RL32165_2006Oct02", "date": "2006-10-02", "retrieved": "2016-03-19T13:57:26", "title": "China\u2019s Currency: Economic Issues and Options for U.S. Trade Policy", "summary": null, "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20061002_RL32165_5611879be944ea7f2400dcd78b1a2a93eb8906da.pdf" }, { "format": "HTML", "filename": "files/20061002_RL32165_5611879be944ea7f2400dcd78b1a2a93eb8906da.html" } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metacrs8766/", "id": "RL32165 2006-04-18", "date": "2006-04-18", "retrieved": "2006-06-01T13:40:28", "title": "China's Currency: Economic Issues and Options for U.S. Trade Policy", "summary": "When the U.S. runs a trade deficit with the Chinese, this requires a capital inflow from China to the United States. This, in turn, lowers U.S. interest rates and increases U.S. investment spending. On the negative side, lower priced goods from China may hurt U.S. industries that compete with those products, reducing their production and employment. In addition, an undervalued yuan makes U.S. exports to China more expensive, thus reducing the level of U.S. exports to China and job opportunities for U.S. workers in those sectors. However, in the long run, trade can affect only the composition of employment, not its overall level. Thus, inducing China to appreciate its currency would likely benefit some U.S. economic sectors, but would harm others, including U.S. consumers. Several estimates of the yuan\u2019s undervaluation are evaluated in the report.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20060418_RL32165_35c70f441338e7fd331dfc4bdb46836facc0dbe1.pdf" }, { "format": "HTML", "filename": "files/20060418_RL32165_35c70f441338e7fd331dfc4bdb46836facc0dbe1.html" } ], "topics": [ { "source": "LIV", "id": "Trade", "name": "Trade" }, { "source": "LIV", "id": "Foreign trade - U.S. - China", "name": "Foreign trade - U.S. - China" }, { "source": "LIV", "id": "Foreign exchange rates", "name": "Foreign exchange rates" }, { "source": "LIV", "id": "Balance of trade", "name": "Balance of trade" }, { "source": "LIV", "id": "International finance", "name": "International finance" } ] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metacrs6790/", "id": "RL32165 2005-05-10", "date": "2005-05-10", "retrieved": "2005-08-10T09:14:32", "title": "China's Exchange Rate Peg: Economic Issues and Options for U.S. Trade Policy", "summary": "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\u2019s policy of pegging its currency (the yuan) to the U.S. dollar. Some Members assert this policy constitutes a form of \u201ccurrency manipulation\u201d intended to give China an unfair trade advantage and is contributing to the loss of U.S. manufacturing jobs.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20050510_RL32165_e7fb64b65210f5974ebc38b61fc8ac33a036da36.pdf" }, { "format": "HTML", "filename": "files/20050510_RL32165_e7fb64b65210f5974ebc38b61fc8ac33a036da36.html" } ], "topics": [ { "source": "LIV", "id": "Trade", "name": "Trade" }, { "source": "LIV", "id": "Foreign trade - U.S. - China", "name": "Foreign trade - U.S. - China" }, { "source": "LIV", "id": "Foreign exchange rates", "name": "Foreign exchange rates" }, { "source": "LIV", "id": "Balance of trade", "name": "Balance of trade" }, { "source": "LIV", "id": "International finance", "name": "International finance" } ] } ], "topics": [ "Economic Policy", "Foreign Affairs" ] }