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China's Currency Policy: An Analysis of the Economic Issues [December 19, 2011]
"This report provides an overview of the economic issues surrounding the current debate over China's currency policy. It identifies the economic costs and benefits of China's currency policy for both China and the United States, and possible implications if China were to allow its currency to significantly appreciate or to float freely. It also examines proposed legislation in the 112th Congress that seeks to address China's currency policy."
Library of Congress. Congressional Research Service
Morrison, Wayne M.; Labonte, Marc
2011-12-19
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Boosting U.S. Exports: Selected Issues for Congress [November 29, 2011]
"For many years, the U.S. government has played an active role in promoting U.S. commercial exports of goods and services by administering various forms of export assistance through federal government agencies. Congress has had a long-standing interest in the effectiveness and efficiency of federal export promotion activities and may exercise export promotion authority in a number of ways, including through oversight, authorization, and funding roles. The recent global economic downturn has renewed congressional interest in U.S. government efforts to expand U.S. exports levels. In addition, in 2010, President Obama introduced a National Export Initiative (NEI), a strategy for doubling U.S. exports by 2015 to generate U.S. jobs. The NEI's key components are to (1) improve advocacy and trade promotion efforts on behalf of U.S. exporters; (2) increase access to export financing; (3) reinforce efforts to remove barriers to trade, such as through free trade agreements (FTAs); (4) enforce trade rules; and (5) pursue policies to promote strong, sustainable, and balanced global economic growth. The NEI also contains a focus on expanding specific U.S. exports, such as exports from small businesses. The growing interest in federal export promotion raises a number of issues for the 112th Congress. One debate involves export promotion definitions. Based on varying views, activities that constitute export promotion can range from direct forms of export assistance (such as commercial advocacy or export financing) to broader forms (such as negotiating FTAs). Although the main goal of export promotion policy generally is to boost U.S. exports, policymakers may use export promotion to advance other goals, such as macroeconomic, economic sector-specific, or international trade policy goals, and may differ on how to prioritize such goals."
Library of Congress. Congressional Research Service
Akhtar, Shayerah Ilias; Fergusson, Ian F.; Morrison, Wayne M.
2011-11-29
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China-U.S. Trade Issues [September 30, 2011]
"U.S.-China economic ties have expanded substantially over the past three decades. Total U.S.- China trade rose from $2 billion in 1979 to $457 billion in 2010. China is currently the second-largest U.S. trading partner, its third-largest export market, and its biggest source of imports. Because U.S. imports from China have risen much more rapidly than U.S. exports to China, the U.S. merchandise trade deficit has surged, rising from $10 billion in 1990 to $273 billion in 2010. The rapid pace of economic integration between China and the United States, while benefiting both sides overall, has made the trade relationship increasingly complex. [...] Some Members of Congress have argued that, given the slow rate of U.S. economic growth and the high rate of unemployment, China's distortive trade policies can no longer be tolerated and have called for tougher action to be taken against China to induce it to eliminate policies that are deemed damaging to U.S. economic interests. [...] Opinions differ as to the most effective way of dealing with China on major economic issues. Some support a policy of engagement with China using various forums, such as the U.S.-China Strategic and Economic Dialogue (S&ED). Others support a somewhat mixed policy of using engagement when possible, coupled with a more aggressive use of WTO [World Trade Organization] dispute settlement procedures to address China's unfair trade policies. Still others, who see China as a growing threat to the U.S. economy and the global trading system, advocate a policy of trying to contain China's economic power and using punitive measures when needed to force China to 'play by the rules.''This report provides an overview of U.S.-China trade relations. It describes the trends in commercial ties, identifies major trade issues, and lists major legislation in the 112th Congress."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2011-09-30
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China's Currency: An Analysis of the Economic Issues [September 29, 2011]
"China's policy of intervening in currency markets to limit or halt the appreciation of its currency, the renminbi (RMB), against the U.S. dollar and other currencies has become an issue of concern for many in Congress. Critics charge that China's currency policy is intended to make its exports significantly cheaper, and its imports more expensive, than would occur if the RMB were a freely-traded currency. They contend that the RMB is significantly undervalued against the dollar and that this has been a major contributor to the large annual U.S. trade deficits with China and the loss of U.S. jobs in recent years. Several bills have been introduced the 112th Congress that seek to address the effects of undervalued currencies, including H.R. 639, S. 328, S. 1130,S. 1267, and S. 1619. On the other hand, some analysts contend that China's industrial policies, its failure to adequately protect U.S. intellectual property rights, and its unbalanced economic growth model, pose more serious challenges to U.S. economic interests than China's currency policy. […] Many economists contend that China should take steps to rebalance its economy by lessening its dependence on exports and fixed investment as the main drivers of its economic growth while boosting the level of domestic consumer demand. A market-based currency policy is seen as an important factor in achieving this goal. Further RMB appreciation could help promote the development of nonexport industries in China, while boosting China's imports, including from the United States. This report provides an economic analysis of China's currency policy and examines current legislation and options for Congress."
Library of Congress. Congressional Research Service
Morrison, Wayne M.; Labonte, Marc
2011-09-29
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China's Holding of U.S. Securities: Implications for the U.S. Economy [September 26, 2011]
"Given its relatively low savings rate, the U.S. economy depends heavily on foreign capital inflows from countries with high savings rates (such as China) to meet its domestic investment needs and to fund the federal budget deficit. The willingness of foreigners to invest in the U.S. economy and purchase U.S. public debt have helped keep U.S. real interest rates relatively low, which, until recently, contributed to rapid U.S. economic growth. However, many economists contend that U.S. dependency on foreign savings was a contributing factor to the U.S. housing bubble and subsequent global financial crisis. China's policy of intervening in currency markets to limit the appreciation of its currency against the dollar (and other currencies) has made it the world's largest and fastest growing holder of foreign exchange reserves, which totaled $3.2 trillion as of June 2011. […] Many analysts argue that China's holdings of U.S. debt give it little leverage over the United States, arguing that as long as China continues to peg its currency mostly to the U.S. dollar, it will have few options other than to keep investing in U.S. dollar assets. Any attempt by China to sell a large portion of its dollar holdings could reduce the value of its remaining dollar holdings, and any subsequent negative shocks to the U.S. (and global) economy could dampen U.S. demand for Chinese exports. They contend that the main issue for U.S. policymakers is not China's large holdings of U.S. securities per se, but rather the high U.S. reliance on foreign capital in general, including in the public debt, and whether that reliance is sustainable."
Library of Congress. Congressional Research Service
Morrison, Wayne M.; Labonte, Marc
2011-09-26
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China-U.S. Trade Issues [August 29, 2011]
"U.S.-China economic ties have expanded substantially over the past three decades. Total U.S.- China trade rose from $2 billion in 1979 to $457 billion in 2010. China is currently the second-largest U.S. trading partner, its third-largest export market, and its biggest source of imports. Because U.S. imports from China have risen much more rapidly than U.S. exports to China, the U.S. merchandise trade deficit has surged, rising from $10 billion in 1990 to $273 billion in 2010. The rapid pace of economic integration between China and the United States, while benefiting both sides overall, has made the trade relationship increasingly complex. [...] Some Members of Congress have argued that, given the slow rate of U.S. economic growth and the high rate of unemployment, China's distortive trade policies can no longer be tolerated and have called for tougher action to be taken against China to induce it to eliminate policies that are deemed damaging to U.S. economic interests. [...] Opinions differ as to the most effective way of dealing with China on major economic issues. Some support a policy of engagement with China using various forums, such as the U.S.-China Strategic and Economic Dialogue (S&ED). Others support a somewhat mixed policy of using engagement when possible, coupled with a more aggressive use of WTO [World Trade Organization] dispute settlement procedures to address China's unfair trade policies. Still others, who see China as a growing threat to the U.S. economy and the global trading system, advocate a policy of trying to contain China's economic power and using punitive measures when needed to force China to 'play by the rules.''This report provides an overview of U.S.-China trade relations. It describes the trends in commercial ties, identifies major trade issues, and lists major legislation in the 112th Congress."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2011-08-29
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China-U.S. Trade Issues [August 10, 2011]
"U.S.-China economic ties have expanded substantially over the past three decades. Total U.S.- China trade rose from $2 billion in 1979 to $457 billion in 2010. China is currently the second-largest U.S. trading partner, its third-largest export market, and its biggest source of imports. Because U.S. imports from China have risen much more rapidly than U.S. exports to China, the U.S. merchandise trade deficit has surged, rising from $10 billion in 1990 to $273 billion in 2010. The rapid pace of economic integration between China and the United States, while benefiting both sides overall, has made the trade relationship increasingly complex. [...] Some Members of Congress have argued that, given the slow rate of U.S. economic growth and the high rate of unemployment, China's distortive trade policies can no longer be tolerated and have called for tougher action to be taken against China to induce it to eliminate policies that are deemed damaging to U.S. economic interests. [...] Opinions differ as to the most effective way of dealing with China on major economic issues. Some support a policy of engagement with China using various forums, such as the U.S.-China Strategic and Economic Dialogue (S&ED). Others support a somewhat mixed policy of using engagement when possible, coupled with a more aggressive use of WTO [World Trade Organization] dispute settlement procedures to address China's unfair trade policies. Still others, who see China as a growing threat to the U.S. economy and the global trading system, advocate a policy of trying to contain China's economic power and using punitive measures when needed to force China to 'play by the rules.''This report provides an overview of U.S.-China trade relations. It describes the trends in commercial ties, identifies major trade issues, and lists major legislation in the 112th Congress."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2011-08-10
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U.S.-Taiwan Relationship: Overview of Policy Issues [August 4, 2011]
"For decades, Taiwan has been of significant security, economic, and political interest to the United States. While the United States does not diplomatically recognize Taiwan, it is a significant autonomous actor in the world. [...] After Taiwan's presidential election in 2008, the United States congratulated Taiwan as a 'beacon of democracy.' Taiwan donates official foreign aid, including $3.5 million to Japan after its catastrophes in March 2011. Taiwan's economy is the 17th largest in the world. Taiwan is the 9th-largest U.S. trading partner, including the 6th-largest market for U.S. agricultural exports. U.S. cumulative investment in Taiwan totaled $21 billion. Taiwan is a major innovator of information technology (IT) products. Ties or tension across the Taiwan Strait affect global peace and stability, the U.S.-Taiwan relationship, and U.S.-PRC [People's Repubic of China] engagement. Taiwan's democracy has allowed its people a greater say in their status, given competing party politics about Taiwan's sovereignty and priorities. The next presidential election is scheduled for January 14, 2012, two months earlier than in previous electoral cycles. Particularly since Taiwan and the PRC resumed the cross-strait dialogue in 2008, one view has stressed concerns that the U.S.-Taiwan relationship has not strengthened. Another approach has seen closer cross-strait engagement as allowing U.S. attention to shift to expand cooperation from a rising China, which opposes U.S. arms sales and other dealings with Taiwan. In any case, Washington and Taipei have put more efforts into their respective relations with Beijing. Taiwan's President Ma Ying-jeou has sought U.S. support for his policies, prioritizing U.S. arms sales and Taiwan's inclusion in the U.S. Visa Waiver Program (VWP). Taiwan also has asked for an extradition treaty. Another issue has concerned whether to resume Cabinet-level visits. The United States and Taiwan have sought to resume trade talks under the Trade and Investment Framework Agreement (TIFA), but there have been U.S. concerns about Taiwan's restrictions on U.S. beef."
Library of Congress. Congressional Research Service
Kan, Shirley; Morrison, Wayne M.
2011-08-04
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China-U.S. Trade Issues [August 4, 2011]
"U.S.-China economic ties have expanded substantially over the past three decades. Total U.S.- China trade rose from $2 billion in 1979 to $457 billion in 2010. China is currently the second-largest U.S. trading partner, its third-largest export market, and its biggest source of imports. Because U.S. imports from China have risen much more rapidly than U.S. exports to China, the U.S. merchandise trade deficit has surged, rising from $10 billion in 1990 to $273 billion in 2010. The rapid pace of economic integration between China and the United States, while benefiting both sides overall, has made the trade relationship increasingly complex. […] Opinions differ as to the most effective way of dealing with China on major economic issues. Some support a policy of engagement with China using various forums, such as the U.S.-China Strategic and Economic Dialogue (S&ED). Others support a somewhat mixed policy of using engagement when possible, coupled with a more aggressive use of WTO [World Trade Organization] dispute settlement procedures to address China's unfair trade policies. Still others, who see China as a growing threat to the U.S. economy and the global trading system, advocate a policy of trying to contain China's economic power and using punitive measures when needed to force China to 'play by the rules.' This report provides an overview of U.S.-China trade relations. It describes the trends in commercial ties, identifies major trade issues, and lists major legislation in the 112th Congress."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2011-08-04
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China's Currency: Any Analysis of the Economic Issues [August 3, 2011]
China's policy of intervening in currency markets to limit or halt the appreciation of its currency, the renminbi (RMB), against the U.S. dollar and other currencies has become an issue of concern for many in Congress. Critics charge that China's currency policy is intended to make its exports significantly cheaper, and its imports more expensive, than would if the RMB were a freely traded currency. They contend that the RMB is significantly undervalued against the dollar and that this has been a major contributor to the large annual U.S. trade deficits with China and the loss of U.S. jobs in recent years. Some Members have urged the Obama Administration take a more aggressive stand against China over its currency policy, such as by designating it as a 'currency manipulator' under U.S. trade law. Others have introduced legislation that would seek to counter the perceived effects of China's currency policy on the U.S. economy. [...] The effects of the global economic slowdown have refocused attention on the need to reduce global imbalances (e.g., savings, investment, and trade), especially in regards to China and the United States. Many economists contend that China should take steps to lessen its dependence on exports and fixed investment for its economic growth and instead rely more on domestic consumption. A market-based currency policy is seen as an important factor in achieving this goal. Further RMB appreciation could help promote the development of non-export industries in China, while boosting China's imports, including from the United States. This report provides an economic analysis of China's currency policy and lists current legislation and options for Congress."
Library of Congress. Congressional Research Service
Morrison, Wayne M.; Labonte, Marc
2011-08-03
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Boosting U.S. Exports: Selected Issues for Congress [July 21, 2011]
"For many years, the U.S. government has played an active role in promoting U.S. commercial exports of goods and services by administering various forms of export assistance through federal government agencies. Congress has had a long-standing interest in the effectiveness and efficiency of federal export promotion activities and may exercise export promotion authority in a number of ways, including through oversight, authorization, and funding roles. […] Thus, it is argued that efforts to ensure foreign compliance with existing trade agreements and the negotiation of new FTAs [Free Trade Agreements] should be part of a strategy to boost U.S. exports. Others argue that more can be done to address U.S. barriers to exports, such as U.S. export controls on dual-use products, which some contend may be too restrictive and may put U.S. exporters at a disadvantage vis-à-vis foreign competitors. Finally, many argue that greater efforts should be made to induce countries with high savings and relatively low consumption and that are heavily dependent on exporting for their economic growth to implement policies that would make private consumption the engine of future economic growth, which would enhance their demand for U.S. goods and services. The NEI [National Export Initiative] also has drawn greater attention to whether the trade policy structure and organization of the federal government is suited to boosting U.S. exports and supporting U.S. jobs effectively and efficiently."
Library of Congress. Congressional Research Service
Villarreal, M. Angeles; Morrison, Wayne M.; Fergusson, Ian F. . . .
2011-07-21
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China's Economic Conditions [June 24, 2011]
"Prior to the initiation of economic reforms and trade liberalization 32 years ago, China maintained policies that kept the economy very poor, stagnant, centrally controlled, vastly inefficient, and relatively isolated from the global economy. Since opening up to foreign trade and investment in 1979, China has been one of the world's fastest-growing economies and has emerged as a major economic and trade power. China's rapid economic growth has sharply improved Chinese living standards and helped raise hundreds of millions of people out of extreme poverty. In 2010, China was the world's second largest economy, largest merchandise exporter, second largest merchandise importer, second largest recipient of foreign direct investment (FDI), and largest holder of foreign exchange reserves. […] On the one hand, China is a large (and potentially huge) export market for the United States. Many U.S. firms use China as the final point of assembly in their global supply chain networks. China's large holdings of U.S. Treasury securities help the federal government finance its budget deficits and keep U.S. interest rates low. However, some analysts contend that China maintains a number of distortive economic policies (such as an undervalued currency and protectionist industrial policies) that undermine U.S. economic interests. They warn that efforts by the Chinese government to promote the development of indigenous innovation and technology could mean that Chinese firms will increasingly pose a 'competitive challenge' to many leading U.S. industries. This report surveys the rise of China's economy, describes major economic challenges facing China, and discusses the implications of China's economic development for the United States."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2011-06-24
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China-U.S. Trade Issues [June 2, 2011]
"U.S.-China economic ties have expanded substantially over the past three decades. Total U.S.- China trade rose from $2 billion in 1979 to $457 billion in 2010. China is currently the second-largest U.S. trading partner, its third-largest export market, and its biggest source of imports. Because U.S. imports from China have risen much more rapidly than U.S. exports to China, the U.S. merchandise trade deficit has surged, rising from $10 billion in 1990 to $273 billion in 2010. The rapid pace of economic integration between China and the United States, while benefiting both sides overall, has made the trade relationship increasingly complex. […] Opinions differ as to the most effective way of dealing with China on major economic issues. Some support a policy of engagement with China using various forums, such as the U.S.-China Strategic and Economic Dialogue (S&ED). Others support a somewhat mixed policy of using engagement when possible, coupled with a more aggressive use of WTO [World Trade Organization] dispute settlement procedures to address China's unfair trade policies. Still others, who see China as a growing threat to the U.S. economy and the global trading system, advocate a policy of trying to contain China's economic power and using punitive measures when needed to force China to 'play by the rules.' This report provides an overview of U.S.-China trade relations. It describes the trends in commercial ties, identifies major trade issues, and lists major legislation in the 112th Congress."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2011-06-02
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China-U.S. Trade Issues [May 6, 2011]
"U.S.-China economic ties have expanded substantially over the past three decades. Total U.S.- China trade rose from $2 billion in 1979 to $457 billion in 2010. China is currently the second largest U.S. trading partner, its third-largest export market, and its biggest source of imports. Because U.S. imports from China have risen much more rapidly than U.S. exports to China, the U.S. merchandise trade deficit has surged, rising from $10 billion in 1990 to $273 billion in 2010. The rapid pace of economic integration between China and the United States, while benefiting both sides overall, has made the trade relationship increasingly complex. […] An increasing number of bills to address various issues relating to U.S.-China economic and trade relations have been introduced in Congress. For example, during the 111th Congress, the House passed H.R. 2378, which would have made certain fundamentally undervalued currencies (such as China's) actionable under U.S. countervailing duty laws. The bill was re-introduced in the 112th Congress (H.R. 639 and S. 328). This report provides an overview of U.S.-China trade relations. It describes the trends in commercial ties, identifies major trade issues, and lists major legislation."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2011-05-06
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China's Currency: An Analysis of the Economic Issues [January 12, 2011]
From the Summary: "Since 1994, the Chinese government has maintained a policy of intervening in currency markets to limit or halt the appreciation of its currency, the renminbi (RMB), against the U.S. dollar and other currencies. Critics charge that this policy has made Chinese exports to the United States significantly cheaper, and U.S. exports to China much more expensive, than would occur under free market conditions. Some policymakers argue that China's currency policy is a major factor behind the large annual U.S. trade deficits with China and has lead to the widespread loss of U.S. manufacturing jobs. Some economists have argued that China's currency policy is disruptive to global economic recovery because it induces many countries to intervene in currency markets in an effort to hold down the value of their currencies against the dollar in order to enable their firms to remain competitive vis-à-vis Chinese firms. Some economists have expressed concern that these actions may worsen economic imbalances and could undermine the world trading system. From July 2005 to July 2008, the central bank of China allowed the RMB to appreciate against the dollar by about 21%. However, once the effects of the global economic crisis began to become apparent, China halted appreciation of the RMB in an effort to limit job losses in industries dependent on trade. From July 2008 to late June 2010, China kept the exchange rate of the RMB at roughly 6.83 yuan (the base unit of the RMB) to the dollar. On June 19, 2010, the China's central bank stated that, based on current economic conditions, it had decided to 'proceed further with reform of the RMB exchange rate regime and to enhance the RMB exchange rate flexibility.' From June 18 to December 24, 2010, China allowed the RMB/dollar exchange rate to rise by about 2.9%% overall. U.S. officials have criticized the slow pace of RMB's appreciation, especially given the rapid growth in Chinese exports and trade surplus over the past year, and have urged China to quicken the pace of currency reform and flexibility."
Library of Congress. Congressional Research Service
Labonte, Marc; Morrison, Wayne M.
2011-01-12
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China-U.S. Trade Issues [January 7, 2011]
"U.S.-China economic ties have expanded substantially over the past three decades. Total U.S.- China trade rose from $2 billion in 1979 to an estimated $459 billion in 2010. China is currently the second-largest U.S. trading partner, its third-largest export market, and its biggest source of imports. Because U.S. imports from China have risen much more rapidly than U.S. exports to China, the U.S. merchandise trade deficit has surged, rising from $10 billion in 1990 to an estimated $273 billion in 2010. The rapid pace of economic integration between China and the United States, while benefiting both sides overall, has made the trade relationship increasingly complex. On the one hand, China's large population and booming economy have made it a large and growing market for U.S. exporters. Over the past decade, China has been the fastest-growing market for U.S. exports. U.S. imports of low-cost goods from China greatly benefit U.S. consumers by increasing their purchasing power. U.S. firms that use China as the final point of assembly for their products, or use Chinese-made inputs for production in the United States, are able to lower costs and become more globally competitive. China's purchases of U.S. Treasury securities (which stood at $907 billion in October 2010) help keep U.S. interest rates relatively low. On the other hand, many analysts argue that growing economic ties with China have exposed U.S. manufacturing firms to greater, and what is often perceived to be, 'unfair,'competition from low-cost Chinese firms. They argue that this has induced many U.S. production facilities to relocate to China, resulting in the loss of thousands of U.S. manufacturing jobs. Some policymakers have also raised concerns that China's large holdings of U.S. government debt may give it leverage over the United States."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2011-01-07
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China's Currency: An Analysis of the Economic Issues [December 30, 2010]
"Since 1994, the Chinese government has maintained a policy of intervening in currency markets to limit or halt the appreciation of its currency, the renminbi (RMB), against the U.S. dollar and other currencies. Critics charge that this policy has made Chinese exports to the United States significantly cheaper, and U.S. exports to China much more expensive, than would occur under free market conditions. Some policymakers argue that China's currency policy is a major factor behind the large annual U.S. trade deficits with China and has lead to the widespread loss of U.S. manufacturing jobs. Some economists have argued that China's currency policy is disruptive to global economic recovery because it induces many countries to intervene in currency markets in an effort to hold down the value of their currencies against the dollar in order to enable their firms to remain competitive vis-à-vis Chinese firms. Some economists have expressed concern that these actions may worsen economic imbalances and could undermine the world trading system."
Library of Congress. Congressional Research Service
Morrison, Wayne M.; Labonte, Marc
2010-12-30
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China-U.S. Trade Issues [December 27, 2010]
"The rapid pace of economic integration between China and the United States, while benefiting both sides overall, has made the trade relationship increasingly complex. On the one hand, China's large population and booming economy have made it a large and growing market for U.S. exporters. Over the past decade, China has been the fastest-growing market for U.S. exports. U.S. imports of low-cost goods from China greatly benefit U.S. consumers by increasing their purchasing power. U.S. firms that use China as the final point of assembly for their products, or use Chinese-made inputs for production in the United States, are able to lower costs and become more globally competitive. China's purchases of U.S. Treasury securities (which stood at $907 billion in October 2010) help keep U.S. interest rates relatively low. On the other hand, many analysts argue that growing economic ties with China has exposed U.S. manufacturing firms to greater and what is often perceived to be, 'unfair' competition from low-cost Chinese firms. They argue that this has induced many U.S. production facilities to re-locate to China, resulting in the loss of thousands of U.S. manufacturing jobs. Some policymakers have also raised concerns that China's large holdings of U.S. government debt (which stood at $907 billion as of October 2010) may give China leverage over the United States."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2010-12-27
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China's Currency: An Analysis of the Economic Issues [October 1, 2010]
"Over the past several years, the Chinese government has maintained a policy of intervening in currency markets to limit or halt the appreciation of its currency, the renminbi (RMB) against other major currencies, especially the U.S. dollar. This policy appears to be largely intended to keep China's export industries competitive internationally and to attract foreign direct investment (FDI), which have been major factors behind China's rapid economic growth. Critics charge that this policy constitutes a form of currency manipulation that is intended to make Chinese exports cheaper, and imports into China more expensive, than they would be under a floating exchange system. Some claim that China's currency policy is a major cause of the large U.S. trade imbalance with China and the loss of numerous U.S. jobs. Many Members of Congress have urged the Obama Administration to designate China as a 'currency manipulator' in order to pressure it to let the RMB appreciate, and several bills have been introduced (including H.R. 2378, S. 1254, S. 1027, and S. 3134) which seek to address China's currency policy. On September 29, 2010, the House approved an amendment in the nature of a substitute to H.R. 2378 (by a vote of 348 to 79). The bill would attempt to apply U.S. countervailing laws to certain fundamentally undervalued currencies."
Library of Congress. Congressional Research Service
Morrison, Wayne M.; Labonte, Marc
2010-10-01
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China-U.S. Trade Issues [July 29, 2010]
"U.S.-China economic ties have expanded substantially over the past three decades. Total U.S.- China trade rose from $5 billion in 1980 to $409 billion in 2008. Although commercial ties were sharply affected by the global economic crisis in 2009 (total U.S. trade with China dropped by 10.5% to $366 billion), China remained the second-largest U.S. trading partner, its third-largest export market, and its biggest source of imports. With a large population and a rapidly expanding economy, China is a huge market for U.S. exporters and investors. However, bilateral economic relations have become strained over a number of issues, including large U.S. annual trade deficits with China (the deficit was $266 billion in 2008, but fell to $227 billion in 2009), China's mixed record on implementing its World Trade Organization (WTO) commitments, its resistance to international calls to reform its pegged (and undervalued) currency system, its relatively poor record on enforcing intellectual property rights (IPR), and its extensive use of industrial policies and discriminatory government procurement policies (such as proposed 'indigenous innovation' certification regulations) to promote domestic Chinese firms over foreign companies. Some observers contend that the business climate in China has worsened over the past few years."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2010-07-29
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China-U.S. Trade Issues [June 21, 2010]
This CRS report examines major U.S.-China trade issues. "U.S.-China economic ties have expanded substantially over the past three decades. Total U.S.- China trade rose from $5 billion in 1980 to $409 billion in 2008. Although commercial ties were sharply affected by the global economic crisis in 2009 (total U.S. trade with China dropped by 10.5% to $366 billion), China remained the second-largest U.S. trading partner, its third-largest export market, and its biggest source of imports. With a large population and a rapidly expanding economy, China is a huge market for U.S. exporters and investors. However, bilateral economic relations have become strained over a number of issues, including large U.S. annual trade deficits with China (the deficit was $266 billion in 2008, but fell to $227 billion in 2009), China's mixed record on implementing its World Trade Organization (WTO) commitments, its resistance to international calls to reform its pegged (and undervalued) currency system, its relatively poor record on enforcing intellectual property rights (IPR), and its extensive use of industrial policies and discriminatory government procurement policies (such as proposed 'indigenous innovation' certification regulations) to promote domestic Chinese firms over foreign companies. Some observers contend that the business climate in China has worsened over the past few years."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2010-06-21
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China's Economic Conditions [December 11, 2009]
"Since the initiation of economic reforms and trade liberalization 30 years ago, China has been one of the world's fastest-growing economies and has emerged as a major economic and trade power. China's rapid economic growth has sharply improved Chinese living standards and helped raise hundreds of millions of people out of extreme poverty. Trade and foreign investment flows have been major factors in China's booming economy. In 2008 China, was the world's second largest merchandise exporter and third largest importer. Over half of China's trade is conducted by foreign-invested firms in China. In 2008, foreign direct investment (FDI) in China totaled $92 billion, making it the destination for FDI among developing economies. The combination of large trade surpluses, FDI flows, and large-scale purchases of foreign currency (especially dollars) has helped make China the world's largest holder of foreign exchange reserves at $2.3 trillion. […] Despite the relatively positive outlook for its economy, China faces a number of difficult challenges that, if not addressed, could undermine its future economic growth and stability. These include pervasive government corruption, an inefficient banking system, over-dependence on exports and fixed investment for growth, the lack of rule of law, severe pollution, and widening income disparities. The Chinese government has indicated that it intends to create a 'harmonious society' over the coming years that would promote more balanced economic growth and address a number of economic and social ills."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2009-12-11
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China's Currency: A Summary of the Economic Issues [December 7, 2009]
"From 1994 until July 2005, China maintained a policy of pegging its currency, the renminbi (RMB) or yuan, to the U.S. dollar at an exchange rate of roughly 8.28 yuan to the dollar. The Chinese central bank maintained this peg by buying (or selling) as many dollar-denominated assets in exchange for newly printed yuan as needed to eliminate excess demand (supply) for the yuan. As a result, the exchange rate between the yuan and the dollar basically stayed the same, despite changing economic factors which could have otherwise caused the yuan to either appreciate or depreciate relative to the dollar. Under a floating exchange rate system, the relative demand for the two countries' goods and assets would determine the exchange rate of the yuan to the dollar. Many economists contend that for the first several years of the peg, the fixed value was likely close to the market value. But in the past few years, economic conditions have changed such that the yuan would likely have appreciated if it had been floating. The sharp increase in China's foreign exchange reserves (which grew from $403 billion in 2003 to $2.27 trillion as of September 2009) and China's large trade surplus with the world ($297 billion in 2008) are often viewed by critics of China's currency policy as proof that the yuan is significantly undervalued."
Library of Congress. Congressional Research Service
Morrison, Wayne M.; Labonte, Marc
2009-12-07
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U.S. Accession to the Association of Southeast Asian Nations' Treaty of Amity and Cooperation (TAC) [October 26, 2009]
"On July 22, 2009, during Secretary of State Hillary Rodham Clinton's visit to Southeast Asia, the United States acceded to the Association of Southeast Asian Nations' (ASEAN) Treaty of Amity and Cooperation (TAC), one of the 10-nation organization's core documents, as had been amended by the 1987 and 1998 TAC Protocols. The move came less than six months after Secretary of State Clinton announced in Jakarta that the Obama Administration would launch its formal interagency process to pursue accession. This report analyzes the legal and diplomatic issues involved with accession to the TAC."
Library of Congress. Congressional Research Service
Morrison, Wayne M.; Garcia, Michael John; Manyin, Mark E.
2009-10-26
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China-U.S. Trade Issues [September 17, 2009]
"U.S.-China economic ties have expanded substantially over the past three decades. Total U.S.-China trade rose from $5 billion in 1980 to $409 billion in 2008. In 2008, China was the second largest U.S. trading partner, its third largest export market, and its biggest source of imports. In 2008, about 12% of total U.S. global trade was with China, although trade flows have declined in 2009 as a result of the global economic slowdown. According to U.S. data, U.S. firms have invested around $46 billion in China through 2008, some of which is aimed at the Chinese domestic market, while other investment has gone into export-oriented manufacturing facilities. With a huge population, a rapidly expanding economy, and over $2 trillion in foreign exchange reserves, China is a potentially huge market for U.S. exporters and investors. However, bilateral economic relations have become strained over a number of issues, including large and growing U.S. trade deficits with China ($266 billion in 2008), China's failure to fully implement its World Trade Organization (WTO) commitments (especially in regards to protection of intellectual property rights), its refusal to adopt a floating currency system, its use of industrial policies (such as subsidies) and other practices deemed unfair and/or harmful to various U.S. economic sectors, and its failure in some cases to ensure that its exported products meet U.S. health and safety standards. […] On September 11, 2009, President Obama announced that he would impose additional tariffs on U.S. imports of certain car and light truck tires from China, due to market disruption caused by such imports. China responded by filing a WTO case against the United States and stating that it had initiated anti-dumping and anti-subsidy cases against U.S. auto parts and poultry."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2009-09-17
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U.S. Accession to the Association of Southeast Asian Nations' Treaty of Amity and Cooperation (TAC) [Updated July 13, 2009]
"In February 2009, Secretary of State Hillary Rodham Clinton announced that the Obama Administration would launch its formal interagency process to pursue accession to the Association of Southeast Asian Nations' (ASEAN) Treaty of Amity and Cooperation (TAC), one of the ten-nation organization's core documents. The Administration reportedly hopes to announce its accession at the ASEAN Regional Forum Foreign Ministerial meeting July 22-23, 2009. This report analyzes the legal and diplomatic issues involved with accession to the TAC."
Library of Congress. Congressional Research Service
Morrison, Wayne M.; Manyin, Mark E.; Garcia, Michael John
2009-07-13
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China-U.S. Trade Issues [June 23, 2009]
"Economic and trade reforms (begun in 1979) have helped transform China into one of the world's fastest growing economies. China's economic growth and trade liberalization, including comprehensive trade commitments made upon entering the World Trade Organization (WTO) in 2001, have led to a sharp expansion in U.S.-China commercial. Yet, bilateral trade relations have grown increasingly strained in recent years over a number of issues, including a large and growing U.S. trade deficit with China, the refusal by China to adopt a floating currency, its failure to fully implement many of its WTO obligations, especially in regards to protection of intellectual property rights (IPR), and problems relating to the health and safety of Chinese-made products. Several Members of Congress have called on the Obama Administration to take a tougher stance against China to induce it to eliminate economic policies deemed harmful to U.S. economic interests and/or are inconsistent with WTO rules. This report provides an overview of U.S.-China economic relations, surveys major trade disputes, and lists bills introduced in the 111th Congress that would impact bilateral commercial ties."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2009-06-23
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China's Currency: A Summary of the Economic Issues [June 17, 2009]
"From 1994 until July 2005, China maintained a policy of pegging its currency, the renminbi (RMB) or yuan, to the U.S. dollar at an exchange rate of roughly 8.28 yuan to the dollar. The Chinese central bank maintained this peg by buying (or selling) as many dollar-denominated assets in exchange for newly printed yuan as needed to eliminate excess demand (supply) for the yuan. As a result, the exchange rate between the yuan and the dollar basically stayed the same, despite changing economic factors which could have otherwise caused the yuan to either appreciate or depreciate relative to the dollar. Under a floating exchange rate system, the relative demand for the two countries' goods and assets would determine the exchange rate of the yuan to the dollar. Many economists contend that for the first several years of the peg, the fixed value was likely close to the market value. But in the past few years, economic conditions have changed such that the yuan would likely have appreciated if it had been floating. The sharp increase in China's foreign exchange reserves (which grew from $403 billion in 2003 to $1.95 trillion as of March 2009) and China's large trade surplus with the world ($297 billion in 2008) are often viewed by critics of China's currency policy as proof that the yuan is significantly undervalued."
Library of Congress. Congressional Research Service
Morrison, Wayne M.; Labonte, Marc
2009-06-17
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China and the Global Financial Crisis: Implications for the United States [June 3, 2009]
"Over the past several years, China has enjoyed one of the world's fastest growing economies and has been a major contributor to world economic growth. However, the current global financial crisis threatens to significantly slow China's economy. Several Chinese industries, particularly the export sector, have been hit hard by crisis, and millions of workers have reportedly been laid off. This situation is of great concern to the Chinese government, which views rapid economic growth as critical to maintaining social stability. China is a major economic power and holds huge amounts of foreign exchange reserves, and thus its policies could have a major impact on the global economy. For example, the Chinese government in November 2008 announced plans to implement a $586 billion package to help stimulate the domestic economy. If successful, this plan could also boost Chinese demand for imports. In addition, in an effort to help stabilize the U.S. economy, China might boost its holdings of U.S. Treasury securities, which would help fund the Federal Government's borrowing needs to purchase troubled U.S. assets and to finance economic stimulus packages. However, some U.S. policymakers have expressed concerns over the potential political and economic implications of China's large and growing holdings of U.S. Government debt securities. This report will be updated as events warrant."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2009-06-03
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U.S. Accesion to ASEAN's Treaty of Amity and Cooperation (TAC) [May 5, 2009]
"In February 2009, Secretary of State Hillary Rodham Clinton announced that the Obama Administration would launch its formal interagency process to pursue accession to the Association of Southeast Asian Nations' (ASEAN) Treaty of Amity and Cooperation (TAC), one of the ten-nation organization's core documents. It is expected that this process could be concluded within the year. If the Administration chooses to send a signal (such as signing the agreement) before then, it could do so at the next likely milestone, the ASEAN Regional Forum Foreign Ministerial meeting in late July 2009. This report will analyze the legal and diplomatic issues involved with the possible accession to the TAC. […]. Some U.S. and Southeast Asian officials and analysts say that expanding U.S. engagement with ASEAN will help boost Southeast Asia's political stature, particularly as China seeks to continue expanding its influence in the region. The major concern with accession is whether the TAC's emphasis on non-interference in other countries' domestic affairs would constrain U.S. freedom of action, particularly its ability to maintain or expand sanctions on Burma. […]. Other objections have included arguments that acceding would accord greater legitimacy to the ruling Burmese junta; a view that ASEAN is insufficiently 'action-oriented'; and a belief that the TAC is an untested, arguably meaningless agreement. One issue that might arise for U.S. policymakers is whether accession to the TAC should take the form of a treaty, subject to the advice and consent of the Senate, or whether the President already has sufficient authority to enter the TAC without further legislative action being necessary."
Library of Congress. Congressional Research Service
Morrison, Wayne M.; Manyin, Mark E.; Garcia, Michael John
2009-05-05
