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China's Currency – An Analysis of Economic Issues

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CRS – China’s Currency: An Analysis of the Economic Issues – Wayne M. Morrison, Specialist in Asian Trade and Finance; Marc Labonte Specialist in Macroeconomic Policy, August 3, 2011

  • “China’s policy of intervening in currency markets to limit or halt the appreciation of its currency, the renminbi (RMB), against the U.S. dollar and other currencies has become an issue of concern for many in Congress. Critics charge that China’s currency policy is intended to make its exports significantly cheaper, and its imports more expensive, than would if the RMB were a freely traded currency. They contend that the RMB is significantly undervalued against the dollar and that this has been a major contributor to the large annual U.S. trade deficits with China and the loss of U.S. jobs in recent years. Some Members have urged the Obama Administration take a more aggressive stand against China over its currency policy, such as by designating it as a “currency manipulator” under U.S. trade law. Others have introduced legislation that would seek to counter the perceived effects of China’s currency policy on the U.S. economy. For example, in the 112th Congress, H.R. 639, S. 328, and S. 1130 would make certain exchange rate policies an actionable subsidy under U.S. countervailing duty cases.”
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