On September 23, 2010, President Obama increased pressure on China to immediately revalue its currency, devoting most of a two-hour meeting with China's prime minister Wen Jiabao to the issue and sending the message if 'the Chinese don't take actions, we have other means of protecting US interests'(Sanger, D.E., 2010). One week after the meeting, the House of Representatives passed a law, Currency Reform for Fair Trade Act, with a partisan majority, allowing firms to seek tariff protection against countries with undervalued currencies (Sanger, D.E. & Chan, S., 2010). That act moved the Chinese currency issue from governmental agenda to the decision agenda (Kingdon, 2003). The US government is taking concrete measures to solve this long-lasting problem.
Regarding the Chinese currency issue, the US has failed to introduce any new policy initiative. Successive US administrations have always urged the Chinese government to permit China's currency (RMB) to fluctuate. Consistent with the US policy, Treasury Secretary Timothy Geithner accused China of 'manipulating' its currency to make export products cheaper than other countries', owning a large market share and minimizing foreign competition through unfair advantages.
US-China tensions over the Yuan exchange rate has simmered for years, and finally moved to the boiling point in September 2010 (The New York Times, 2010). The question of why the US government continues to press the Chinese government will be investigated in this literature review research paper.
[...] unless China immediately revalue its currency, or more accurately, raises the value of its currency by This figure is the midpoint of a range of estimates that China undervalues its currency relative to the U.S. dollar by 15%-40% (Tatom, J. 2007). In the same month, concerning Chinese currency issue, there were four other bills proposed by Senators or Representatives of House concerning the Chinese currency issue. In total, there were ten bills proposed to address the issues of China's currency, trade deficit and job losses in 2003 (Hufbauer, G. [...]
[...] government keeps urging China to revalue its currency. Preeg, E. H. (2003). Exchange Rate Manipulation to Gain an Unfair Competitive Advantage: The Case Against Japan and China. Dollar Overvaluation and the World Economy. Washington D.C.: Institute for International Economics. 267- 284. According to the International Monetary Fund's criteria, with clear evidence of protracted large-scale intervention, Japan and China have been continuously manipulating their currencies to gain an unfair competitive advantage in trades. The U.S. government takes the currency issue quite seriously, because there are three distinct adverse consequences for U.S. [...]
[...] politicians are unaware of the intricacies of this issue, so they just seek a politically popular solution to a complex problem, which is obviously not wise. SUMMARY The Chinese currency issue consistently attracts the U.S. government's attention. This is largely due to the U.S. trade imbalance and the belief that China is responsible for the huge trade deficit because the Chinese government deliberately keeps its currency undervalued to unfairly create a trade advantage that has contributed to the loss of U.S. [...]
[...] and great frustration over unfulfilled promises by China to allow its currency to appreciate, which would make Chinese goods less competitive in the U.S. Clearly, the U.S. government now wants to take concrete measures to deal with Chinese currency issue. Hufbauer, G. & Brunel, C. (2007). US Congress and the Chinese Peterson Institute for International Economics, Washington DC, October 19. Retrieved from http://piie.com/publications/papers/hufbauer1007.pdf. In September 2003, Senator Schumer introduced the first Congressional bill (S. 1586) targeting the value of China's currency—RMB. [...]
[...] M. & Labonte, M. (2010). China's Currency: An Analysis of the Economic Issues. CRS Report for Congress, October 2010. Retrieved from www.fas.org/sgp/crs/row/RS21625.pdf. Pan, W., Upadhyaya, K. & Liang, J. (2006). Impact of China's Yuan Revaluation. International Business & Economics Research Journal: Vol.5: No 67-71. Preeg, E. H. (2003). Exchange Rate Manipulation to Gain an Unfair Competitive Advantage: The Case Against Japan and China. Dollar Overvaluation and the World Economy. Washington D.C.: Institute for International Economics. 267- 284. Pocha, J. S. [...]
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