{ "id": "RL33322", "type": "CRS Report", "typeId": "REPORTS", "number": "RL33322", "active": false, "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department", "versions": [ { "source": "EveryCRSReport.com", "id": 317006, "date": "2006-07-19", "retrieved": "2016-04-07T18:55:43.594029", "title": "China, the United States and the IMF: Negotiating Exchange Rate Adjustment", "summary": "In recent years, the United States and other countries have expressed considerable concern that\nChina's national currency (the yuan or renminbi) is seriously undervalued. Some analysts say the\nyuan needs to rise by as much as 40% in order to reflect its equilibrium value. Critics say that China's\nundervalued currency provides it with an unfair trade advantage that has seriously injured the\nmanufacturing sector in the United States. Chinese officials counter that they have not pegged the\nyuan to the dollar in order to gain trade advantages. Rather, they say the fixed rate promotes\neconomic stability that is vital for the functioning of its domestic economy. \n On July 21, 2005, China announced a new foreign exchange system which is intended to allow\nmore flexibility and to permit the international value of the yuan to be established by market forces. \nThe yuan was increased in value by 2% and a \"managed float\" was introduced. However, the value\nof the yuan has changed little since then. Despite the publication of many studies, scholars do not\nagree whether or by what percent the yuan is undervalued. The wide range of estimates suggests that\nthere is no reason to believe that any particular figure is correct. It is not clear that the U.S. trade\ndeficit would be lower or U.S. manufacturers would benefit if China raised the value of the yuan. \nIn the short run, U.S. producers might be able to sell higher-priced products to U.S. consumers if the\ninflow of Chinese goods were reduced. In the long run, though, as long as the United States is a net\nimporter of capital, it would have a trade deficit and other countries would ultimately replace China\nas suppliers of low-cost goods to the U.S. market.\n The Treasury Department has strongly urged China in recent years to adopt procedures that\nwould allow the yuan to rise in value. Congress is considering legislation that would penalize China\nif its currency is not revalued. The United States has pursued the yuan-dollar exchange rate issue\nas a bilateral U.S.-China issue. Other countries are also affected by the presumably undervalued\nyuan -- some more than the U.S. -- but they have allowed the United States to take the lead.\n There are at least five ways the United States could deal with the yuan exchange rate issue. \nSome of these would involve other countries more explicitly in the process. First, the United\nStates could continue pressing China publicly to raise the value of the yuan on the assumption that\nchange will not occur without foreign pressure. Second, it could stop pressing China publicly, on the\nexpectation that China might move more rapidly towards reform if it is not pressured. Third, the\nUnited States could restrict imports from China pending action to revalue the yuan. Fourth, the U.S.\ncould ask the IMF to declare that China is manipulating its currency in violation of IMF rules. Fifth,\nthe United States could refer the issue to the World Trade Organization (WTO), asserting that the\nUnited States has been injured by unfair trade practices linked to the undervaluation of China's\ncurrency. The WTO, in turn, could authorize trade remedies (tariffs on Chinese goods, for example)\naimed at correcting this abuse. This report will be updated as new developments arise.", "type": "CRS Report", "typeId": "REPORTS", "active": false, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/RL33322", "sha1": "774abf9aa3bc15238e11a8669c2405b22362002f", "filename": "files/20060719_RL33322_774abf9aa3bc15238e11a8669c2405b22362002f.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/RL33322", "sha1": "a391db88dab940739916fe05df3922419d67ae8b", "filename": "files/20060719_RL33322_a391db88dab940739916fe05df3922419d67ae8b.pdf", "images": null } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metacrs9142/", "id": "RL33322 2006-03-13", "date": "2006-03-13", "retrieved": "2006-08-10T15:01:18", "title": "China, the United States and the IMF: Negotiating Exchange Rate Adjustment", "summary": "In recent years, the United States and other countries have expressed considerable concern that China\u2019s national currency (the yuan or renminbi) is seriously undervalued. Some analysts say the yuan needs to rise by as much as 40% in order to reflect its equilibrium value. Critics say that China\u2019s undervalued currency provides it with an unfair trade advantage that has seriously injured the manufacturing sector in the United States. Chinese officials counter that they have not pegged the yuan to the dollar in order to gain trade advantages. Rather, they say the fixed rate promotes economic stability that is vital for the functioning of its domestic economy.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20060313_RL33322_c0c73b0f88a5c3aa82c80824ea4f6f92e44fcb1f.pdf" }, { "format": "HTML", "filename": "files/20060313_RL33322_c0c73b0f88a5c3aa82c80824ea4f6f92e44fcb1f.html" } ], "topics": [ { "source": "LIV", "id": "Trade", "name": "Trade" }, { "source": "LIV", "id": "Asia-dollar market", "name": "Asia-dollar market" }, { "source": "LIV", "id": "Currency devaluation", "name": "Currency devaluation" }, { "source": "LIV", "id": "Foreign exchange rates", "name": "Foreign exchange rates" }, { "source": "LIV", "id": "Foreign trade - U.S.", "name": "Foreign trade - U.S." }, { "source": "LIV", "id": "Foreign trade - China", "name": "Foreign trade - China" }, { "source": "LIV", "id": "International finance", "name": "International finance" } ] } ], "topics": [ "Economic Policy", "Foreign Affairs" ] }