We haven't heard much about currency manipulation lately, but according to my friend C. Fred Bergsten of the Peterson Institute for International Economics, it was and remains a major threat to the international monetary system.
Hard as it may be to believe, there are forces in Washington that oppose the revival of the U.S. manufacturing sector. Who are they, and how do we counter their efforts? I think -- roughly -- they fall into five groups.
While we wait for our political leaders to stand up to a country that is clearly cheating at trade, American producers suffer from the hidden tax of currency manipulation, our unemployment rate remains frustratingly high, and our trade deficit with China grows a little wider each day.
A new bill was introduced in the House today to fight currency manipulation, including China's. This bill would treat undervalued currency as a subsidy under U.S. trade law, meaning we could apply tariffs to goods from countries that do this.
Here's a quick primer on what the candidates have been saying, and where American manufacturing can travel in the next few years. Expect a crescendo on China next week when the candidates spar at the next debate.
Romney is heating up his offensive on the China trade issue. His campaign blog just released a page promising he "will ensure China plays by the rules," and blaming the Obama administration for not doing so, starting with currency manipulation.
Mitt Romney has certainly been making some pleasant noises about fixing America's trade mess, whose $500 billion a year deficit is probably the biggest unsung reason our economy isn't turning around. But does he really mean what he says?
For years, China deliberately diminished the value its currency. This artificially reduces the price of Chinese exports. Simultaneously, it artificially raises the price of U.S. exports to China. Dithering by the U.S. House of Representatives on this issue has reduced America to victim status.
Ten years after the United States officially ended its yearly review of China's trade status, no one can credibly argue that China is any freer or more attentive to human rights, nor can they claim the United States is better off economically.
We should address this clear and present danger to our economy and our sovereignty straight on and cut off Beijing's purchases of American debt. Shutting off China's access to this currency disposal site will break their sterilization system.
Small steps like Currency Exchange Rate Oversight Reform Act are the hard, boring stuff out of which significant political progress is made. It won't be easy, but clearly the political momentum is in favor of doing something about this problem.
If Romney truly understands the underlying economics of our present trade mess, he knows that the present order is unsustainable. And he -- and his backers -- probably calculate that they'd rather have a Republican clean it up than a Democrat.