Why the yuan’s value matters to U.S.
TEXT OF INTERVIEW
Stacey Vanek-Smith: The Obama administration has been putting a lot of pressure on China to let its currency appreciate in value. But it’s stopped short of calling China a currency manipulator. The Treasury Department issued the report on China’s currency yesterday. Marketplace’s Nancy Marshall Genzer joins us now, live from Washington. Good morning, Nancy!
Nancy Marshall Genzer: Good morning.
Vanek-Smith: Nancy, does this mean the president has decided not to punish Beijing for keeping its currency so low?
Nancy Marshall Genzer: Sort of. The Treasury Department is required by Congress to produce this report on global currencies every six months. The report has kind of evolved into a way to pressure other countries on their currencies. Treasury Secretary Timothy Geithner is following a two-track approach. As you said, he’s not branding China a currency manipulator. But he also says Treasury will “closely and regularly monitor” China’s currency, the yuan. Now China did loosen the yuan’s peg to the dollar recently. But the yuan has risen less than a percent against the dollar since then.
Vanek-Smith: Now Nancy, why is the value of the yuan so important to the U.S.? This story pops up a lot.
Marshall Genzer: Oh, it sure does. And it’s kind of hard to understand, but if China’s currency is really low against the dollar, Chinese exports are cheaper than U.S. exports. U.S. companies say that gives China an unfair advantage. Now, some members of Congress are being more hard nosed about this than the Treasury Department is. Senator Charles Schumer, a New York Democrat, says it’s going to take an act of Congress to, in his words, “do the obvious and call China out for its currency manipulation.”
Vanek-Smith: What’s the administration’s next step with China?
Marshall Genzer: Well, the next global currency report is due this October. Plus, finance ministers from the world’s leading economies are going to meet this fall. And the subject of China’s currency is sure to come up.
Vanek-Smith: Without a doubt. Nancy Marshall Genzer in Washington. Thank you, Nancy.
Marshall Genzer: You’re welcome.
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