Friday, June 24, 2005

Greenspan: Punishing Chinese Imports Doomed to Fail


WASHINGTON (Reuters) - Federal Reserve Chairman Alan Greenspan warned on Thursday that any congressional bid to impose punitive curbs on Chinese imports with the aim of protecting U.S. jobs was doomed to failure.
In prepared testimony for delivery to the Senate Finance Committee, Greenspan said stiffer duties on Chinese imports would simply shift the source of U.S. imports to other low-cost suppliers.
``A policy to dismantle the global trading system, in a misguided effort to protect jobs from competition, would redound to the eventual detriment of all U.S. job-seekers, as well as millions of American consumers,'' he said.
Greenspan said the sooner China adopted a more flexible currency, the better it would be for it and for the global economy -- a position that the administration of U.S. President Bush has advocated for the past two years.
Greenspan was appearing in front of the committee along with Treasury Secretary John Snow, who similarly said that trying to compel China to adopt a more flexible currency through imposing tariffs on its imports would be counterproductive.

Snow Warns Congress Against China Sanctions

WASHINGTON (Reuters) - U.S. Treasury Secretary John Snow said on Thursday he believes China is ready to move to a more flexible exchange rate right away, but warned Congress steps to pressure Beijing through sanctions would backfire.
``Action on any of the punitive legislative proposals before Congress now would be counterproductive to our efforts at this time,'' Snow said in testimony prepared for the Senate Finance Committee.
Snow and Federal Reserve Chairman Alan Greenspan were set to speak to lawmakers on U.S. economic relations with China amid mounting congressional concern that Beijing's policy of pegging its currency is hurting U.S. exporters.
Sen. Charles Schumer, a New York Democrat, Sen. Lindsey Graham, a South Carolina Republican, and Rep. Phil English, a Pennsylvania Republican, have introduced measures that would threaten China with higher tariffs if it does not introduce greater currency flexibility.
Snow renewed the administration's insistence that diplomatic pressure has led to incremental but meaningful steps by Chinese authorities that have laid the groundwork for currency flexibility.
``This financial diplomacy has yielded important results,'' he said.
At the same time, the treasury secretary called China's policy of pegging its currency, the yuan, to the dollar ``highly distortionary'' and said it poses risks for China and its neighbors.
He told lawmakers that failure by Beijing to make ``substantial alteration'' to its currency policies would likely lead to China's designation as a currency manipulator under U.S. law, which in turn would lead to the possibility of sanctions.
``China is now ready and should move without delay in a manner and magnitude that is sufficiently reflective of underlying market conditions,'' Snow said.

U.S. - China Economic Relations June 23, 2005

Testimony of Chairman Greenspan on China :

John W. Snow, Secretary, U.S. Department of the Treasury :


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