Déjà Vu China

10/05/2011 12:50 pm ET | Updated Dec 05, 2011

All of a sudden Congress, or at least the Senate, is on the brink of enacting some sort of legislation intended to retaliate against China for its currency manipulation. For me, to borrow a line from Yogi Berra, it is "déjà vu all over again."

I served 14 years as President of the National Association of Manufacturers (NAM), and during that time the NAM was subjected to a steady drumbeat of criticism from mostly smaller manufacturers demanding that we take a stronger stand against China's predatory trade practices, mainly its currency manipulation. They contended, with justification, that China's currency policy enabled many Chinese manufacturers to sell finished products in the U.S. for less than their U.S. competitors had to pay for raw materials.

At the same time, I was frequently reminded by some of NAM's larger members that China's currency policy was just fine with them. I am sure it was. They were making boatloads of products in China and shipping them back to the U.S. for sale to American consumers. They were doing very well indeed.

For the record, it was and remains NAM's official policy that the values of all currencies should be set by the free market. But twice a year, the U.S. Department of the Treasury, like clockwork, issued its regular finding that China is not a currency manipulator. That dreary exercise in blatant duplicity always reminded me of another funny quote, this one from Chico Marx: "Who you gonna believe, me or your eyes?"

Of course, this is not in the least bit humorous. The reason the Treasury always chooses not to recognize China's currency manipulation is our dependence on China to fund our massive budget deficits. To keep its currency undervalued, China buys seas of U.S. dollars and government debt instruments, enabling our government to continue spending vast sums of money it does not have.

But this devil's bargain comes at a steep cost. Over the past 10 to 12 years, China has absconded with vast swaths of our manufacturing base. The loss of millions of manufacturing jobs is one of the key drivers of our current economic malaise.

If Congress is belatedly stepping up to the plate on China's currency manipulation, it may be because we are finally recognizing that this assault on U.S. manufacturing is having a deadly impact on the overall economy. The crucial question is whether we will seize this opportunity to recognize the importance of manufacturing to our economy and make manufacturing competitiveness a national priority like other nations do. Quoting Shakespeare this time, that would be "a consummation devoutly to be wished."

Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute. Jerry is available for speaking engagements.