Chinese Lobby Aims to Trash Congress' Attempt to End Currency Manipulation

China's GDP has grown more than 7 percent over the past 25 years. China sells four times as many goods in our economy than we do in theirs. China sells $218 billion in goods to the U.S. every year whereas the U.S. only sells $57 billion to China, most of which is fast food like KFC, McDonald's, Burger King and Dunkin Donuts, to name a few. This trade imbalance, of course, has had a play on America's current economic and unemployment woes.

Between 1990 and 2008, the number of employed workers in the U.S. grew from 122 million to 149 million. On the surface that sounds great, but not so much when you consider the fact that 98 percent of this job growth was in the service industry and other sectors that produce goods that must be consumed domestically. For instance, the government and the health care industry together created 10 million new jobs between 1990 and 2008, just under 40 percent of the total number of jobs created during that period. Construction oriented jobs also flourished during this time.

Meanwhile, the manufacturing, engineering and consulting services sectors, which accounted for 24 million jobs in 1990, grew only 600,000 jobs between 1990 and 2008. An agreement between the U.S. and China was devised and quietly implemented in the early 1990s. Since then, manufacturing jobs have moved abroad because it is significantly cheaper to produce abroad than on U.S. soil. China has kept its currency value at about 40 percent below its free market value over the past 20 years.

The free trade open market system works outside the parameters of any kind of central authority. Consequently, there has never been a development or establishment of rules and regulations that typically govern economic systems. Therefore, there are no real consequences or penalties for currency manipulators. The system futilely relies on an honor system, a system that is no longer valued in today's global economic climate. However, if the proposed Currency Exchange Rate Oversight Reform Act (S.1619) is passed, the U.S. will have gained the legality of labeling China a currency manipulator.

The Currency Exchange Rate Oversight Reform Act is not a 21st century version of the protectionist 1930s Smoot-Hawley Act. This bill was designed to solve the issue surrounding China's currency manipulation and be World Trade Organization (WTO) legal. If the bill is passed, then maybe the proper recourse-slapping the Chinese with tariffs-can begin. Nonetheless, I am more than certain the Chinese government will do everything within its power to counter U.S. sponsored international legislation.

This brings us to my next point of contention: the infiltration of foreign lobbyists in Congress. It is extremely naïve these days to think Washington politicians are not influenced by foreign lobbyists. The frightening truth is many U.S. Congressmen are on China's payroll. So, even if the Currency Exchange Reform Act is passed, it will most likely be a weak, watered down version that will allow China little regulation and a lot of wiggle room.

Sincerely,
Kenneth Coleman