Obama takes heat over China

WASHINGTON – Congressional pressure built Thursday for tougher action against China over its trade and exchange rate policies that hurt American workers, as lawmakers from both parties angrily accused the Obama administration of failing to represent U.S. interests.

“This administration, in my view, must be the one to take a stand … we clearly need concrete action,” Senate Banking Committee Chairman Christopher Dodd, D-Conn., said at the start of a hearing on China’s currency policies, with Treasury Secretary Timothy Geithner as its lead witness.

The lopsided exchange rate affects American companies several ways. It makes Chinese products cheaper when imported into the United States – something American consumers seem not to mind. However, it also makes U.S. exports more expensive when sold in China, or in other countries in competition against Chinese products.

Alabama Republican Sen. Richard Shelby noted that President Barack Obama, as a candidate, had no qualms about saying that China manipulates its currency, the yuan, to benefit its products against those of its foreign competitors, including the United States.

Shelby even read confirmation-hearing testimony from Geithner saying that Obama thinks China unfairly manipulates its exchange rate.

“Unfortunately, once in office, the administration showed it was all bark and no bite,” Shelby said. “It’s time, I believe, that the administration re-order its priorities.”

The administration also took friendly fire.

“At a time when the U.S. economy is trying to pick itself off the ground, China’s currency manipulation is like a boot to the throat of recovery … and this administration refuses to take this boot off our neck,” said Sen. Charles Schumer, D-N.Y.

Shelby tried to get Geithner to say that he still thinks that China manipulates its currency – something the administration recently chose not to do in a required report to Congress.

The yuan is “significantly undervalued,” Geithner acknowledged, pointing out that the International Monetary Fund also recently concluded that. However, the Treasury chief wouldn’t say what most economists now say, that China actively manipulates its currency for home-field advantage.

Geithner repeatedly told lawmakers that if he’d formally concluded that China is manipulating its currency value, the law would order him to negotiate with China, which he’s already doing.

However, Schumer reminded Geithner that such a designation would allow numerous U.S. industries to move forward on complaints seeking remedies for unfair trade.

In prepared remarks and under questioning, Geithner stressed that China is a great opportunity for U.S. companies. Thus a cautious, structured approach is needed to resolve conflicts, he said.