Last week, I wrote about the growing bipartisan consensus to confront China on its illegal currency manipulation. 130 bipartisan lawmakers issued a call to action and economists from left to right have come out saying something needs to be done to address this issue. Now a new player has entered the chorus of those calling for something to be done about illegal Chinese Currency Manipulation - the Chamber of Commerce.
The Chamber of Commerce has traditionally advocated for free trade on behalf of big, multinational companies. In the 1990's, the Chamber lead the fight to get China into the World Trade Organizations. So, for the Chamber to abandon China is extraordinary. As the Financial Times notes:
The US business community can no longer resist political pressure for Washington to take a tougher stand against China on trade issues, according to a senior figure from the US Chamber of Commerce.
Myron Brilliant, senior vice-president for international affairs, who has previously helped to protect Beijing from hawkish trade policies, told the Financial Times: "I don't think the Chinese government can count on the American business community to be able to push back and block action [on Capitol Hill]."
While Brilliant did not say the Chamber of Commerce would back legislative efforts to label China a "currency manipulator," his lack of support for China is an indication of which way the political winds are blowing. As the story notes:
Mr Brilliant said corporate America's attitude had changed in response to a range of "industrial policies" pursued by Beijing, including the undervaluation of the renminbi, which made it harder for US companies to do business and compete with China. He also cited the tough economic times in the US - particularly the near 10 per cent jobless rate -- as making it more difficult to argue against tough action on China.
The Chamber backed up this talking point by releasing a survey showing that "38 percent of foreign firms questioned by the American Chamber of Commerce say they feel increasingly unwelcome to participate and compete in the Chinese market." More startling, 57 percent of "foreign firms specializing in high-tech and information technology" said they felt negatively affected by government policies.
There is clearly a shift in both corporate America and Washington establishment thinking on the issue of China. Reports indicate that President Obama, needing to do something big to protect jobs, is seriously debating labeling China a "currency manipulator" as the April 15th deadline for doing so approaches. This is all the more reasons why we should be pushing President Obama to label China a currency manipulator on April 15th. Then if China fails to fix the problem, we should push President Obama to take more aggressive actions like placing tariffs on China as Paul Krugman and others have suggested.
2-3 millions jobs could be created by fixing China's exchange rate problem. As economist C. Fred Bergsten noted "If there is going to be a serious jobs program, the exchange rate of the dollar must be at the center of the debate."