China's yuan will rise someday. US should push for now.
"The jig is up," says Charles Blum, executive director of the Fair Currency Coalition, a group of 46 American industry associations, unions, and companies striving to get China to boost the value of its currency.
Maybe he's right.
Two days after this writer spoke with Mr. Blum, China's central bank chief, Zhou Xiaochuan, startled the world by saying his nation eventually will move away from its current exchange rate policy.
American officials have been urging China for years to revalue the yuan upward against the dollar, thereby making Chinese imported goods more expensive and US goods more competitive. Last fall when President Obama met with Chinese President Hu Jintao, reportedly half the time was spent on the currency dispute.
So far, though, the Chinese still control the value of their currency at an exchange rate that Blum maintains amounts to a 30 to 40 percent unfair subsidy of China's exports.
This is not a mere technical issue. The undervalued renminbi, or yuan, is undercutting the American economic recovery, argues Blum.
Mr. Zhou cautioned that Beijing may not let the yuan appreciate as fast as many nations desire.
Blum doesn't have much faith that talk will persuade China to act against what it sees as its national interest in providing export-related jobs for tens of millions of peasants moving off farms.
"You can't negotiate [with China] without leverage," he says. "You need to have a tool." His favored tool is legislation now before Congress, the Currency Reform for Fair Trade Act. It would open the door for the United States to impose immediately countervailing duties on various Chinese imports subsidized by currency manipulation. Such duties are sometimes a real threat, more than 20 percent.