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Kai Ryssdal: Treasury Secretary Timothy Geithner spent this Thursday on Capitol Hill. China was the subject, the foreign exchange markets to be specific. Geithner was making the rounds to explain how the Obama Administration’s just about out of patience. The White House says Beijing has been keeping its currency, the yuan, artificially low, contributing to our massive trade gap. Skeptics say they’re heard all the complaints from administrations before — and now it’s put up or shut up time.
Our senior business correspondent Bob Moon reports.
Bob Moon: University of Maryland economist Peter Morici says China’s cheap currency is back in the spotlight because it’s that time of year again.
Peter Morici: This is all bluster before the election.
Morici says neither Congress nor the administration seem willing to go beyond their tough talk. Alabama’s Richard Shelby is the ranking Republican on the Senate Banking Committee.
Richard Shelby: The only question is, why is the administration protecting China by refusing to designate it as a currency manipulator?
Morici complains it’s a worn-out question.
Morici: Over and over again, China has taken token steps when interest has flared in the United States, only to back off.
Indeed, Treasury Secretary Geithner admitted as much to Senator Shelby today, even while accusing China yet again of keeping its currency undervalued.
Timothy Geithner: They are moving to let it rise, but not very quickly.
Shelby: Or not very much, too.
Geithner: Not very much, either.
Even so, Geithner said the administration wants to see a substantial change “over time.”
Morici: What Secretary Geithner said today was, “Shame on you, China.”
Some experts say the U.S. should seek sanctions from the World Trade Organization, but Morici warns that could take a year or two with uncertain results.
At the Peterson Institute for International Economics, Director C. Fred Bergsten suggests other unilateral options, including flooding the market with dollars.
C. Fred Bergsten: When the Chinese intervene to keep the dollar too strong, we could intervene on the other side to counteract that effect.
Or, he says, slap special tariffs on Chinese goods to make up for their cheap currency. Bergsten doubts Beijing would retaliate by selling its substantial investment in U.S. treasuries. He says the financial pain of that would hit the Chinese as much as the U.S.
I’m Bob Moon for Marketplace.
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