China's Currency: U.S. Options (CRS Report for Congress)
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| Release Date |
July 29, 2005 |
| Report Number |
RL33018 |
| Report Type |
Report |
| Authors |
Jonathan E. Sanford, Foreign Affairs, Defense, and Trade Division |
| Source Agency |
Congressional Research Service |
Summary:
In recent years, the United States and other countries have expressed, with considerable concern, the view that China's national currency (the yuan or renminbi) was seriously undervalued. Some analysts say the yuan needs to rise by as much as 40% in order to reflect its true value. Critics say that, by undervaluing its currency, China gains unfair trade advantage and has seriously injured the manufacturing sector in the United States. Chinese officials say that they have not pegged the yuan to the dollar in order to gain trade advantages. Rather, they say the fixed rate promotes economic stability. Without this, they say, fluctuations in the yuan's value could cause serious dislocations in China's domestic economy. [â¦] The United States has pursued the yuan-dollar exchange rate issue as a bilateral U.S.-China issue. Other countries are also affected by the presumably undervalued yuan -- some more than the U.S. -- but they have allowed the United States to take the lead. In this, they stand to benefit from any changes the U.S. effects in its confrontation with China while they take none of the blame. There are at least five ways the United States could deal with the yuan exchange rate issue. Some of these would involve other countries more explicitly in the process.
