China, U.S. work on currency deal
TEXT OF STORY
Kai Ryssdal: Timothy Geithner made a decision over the weekend that could have some far-reaching consequences. The Treasury Secretary said he’s going to wait a while before he announces whether or not he thinks China is officially manipulating its currency.
From Washington, Marketplace’s Nancy Marshall Genzer has more.
NANCY MARSHALL GENZER: China’s critics say it’s manipulating its currency to make Chinese exports cheaper. The White House was due to issue a currency report on April 15th. But then China’s president agreed to attend a security summit April 12th. The Obama administration needs China’s help to limit nuclear proliferation.
CLYDE PRESTOWITZ: So they don’t want to antagonize and alienate China. So they’d rather make some kind of an arrangement.
That’s Clyde Prestowitz. He heads the Economic Strategy Institute. He thinks the U.S.-China arrangement could go like this: The two countries keep talking for three months. Then China announces it’ll allow its currency, the yuan, to inch up in value.
PRESTOWITZ: So it wouldn’t look like they’re knuckling under to the White House.
And the White House can say it’s boosting U.S. exports. Nicholas Lardy is at the Peterson Institute for International Economics. He says a rise in the yuan would help U.S. exporters of things like machinery and steel pipes.
NICHOLAS LARDY: If the prices of Chinese goods go up 5 percent and the price of U.S. goods goes down 5 percent then for some products that will make a difference.
And it’s a win for China too.
John Frisbie is president of the U.S.-China Business Council. He says right now China has to use lots of yuan to buy commodities like oil, which are priced in dollars.
JOHN FRISBIE: If their currency strengthens they’d pay less in their own currency for those products, and it would help their inflation.
And tame inflation would help China avoid social unrest, one of Beijing’s biggest fears about letting its currency rise.
In Washington, I’m Nancy Marshall Genzer for Marketplace.
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