Congress to look into yuan manipulation
Dollars and yuan notes.
TEXT OF STORY
BILL RADKE: Today Congress begins two days of hearings on China's currency. Treasury Secretary Timothy Geithner is scheduled to testify. Many members of Congress say China is keeping its currency artificially low, getting an unfair trade advantage. Marketplace's Nancy Marshall Genzer joins us live, from Washington.
Good morning, Nancy.
NANCY MARSHALL GENZER: Good morning, Bill.
RADKE: We've heard these arguments before, but what can these hearings really accomplish?
MARSHALL GENZER: Well, some members of Congress want to pass a law that would force China to let its currency rise in value. They say that China has devalued, the yuan, by as much as 40 percent. And that gives Chinese exporters an unfair advantage because their products are cheaper than U.S. products because the dollar is worth more than the yuan.
RADKE: Right. But, practically speaking, what can the U.S. really do -- especially since China owns so many of our treasury bonds?
MARSHALL GENZER: Yes it does. Right now, some people say we don't have a lot of leverage against China because they've bought up so many of our debt. They could just threaten to sell their treasuries. That would mean we would pay higher interest rates when we borrow money. But other analysts say China wouldn't make good on those threats to sell its securities. And that's because if it did sell, it would hurt the value of the treasuries it still owned. These analysts say instead of focusing so much on the value of the Chinese currency, the U.S. should pressure China on its trade policies. And if Congress does pass legislation, it could make things a little bit uncomfortable next week for President Obama when he is expected to meet with the Chinese prime minister of the fringes of U.N. meetings in New York.
RADKE: Marketplace's Nancy Marshall Genzer live in Washington. Thank you, Nancy.
MARSHALL GENZER: You're welcome.