Although there are many reasons to believe that the current downturn won't be a replay of what took place nearly eighty years ago, some aspects are sure to be repeated. This includes ongoing efforts by countries around the world to erect barriers that "protect" domestic markets from foreign competition, unfair or otherwise. At a time when economic woes have already impacted cross-border commerce, it's likely that protectionist efforts by some will spawn tit-for-tat moves by others. So, it's worth keeping tabs on developments like those detailed in the following Reuters report, "China Surplus Shows US Must Push on Yuan-Schumer":
Senator Charles Schumer, an outspoken critic of China's trade policy, on Tuesday seized on an unexpected surge in the East Asian country's trade surplus to renew his call for U.S. legislation to deal with Beijing's currency practices.
"These numbers show just how little motive China has to end its currency manipulation unless it is pushed to do so," Schumer said in a statement after new data showed China's trade surplus widened in July to an 18-month high of $28.7 billion.
Schumer is one of the U.S. Congress' loudest critics of China's currency practices, which he blames for scores of lost U.S. manufacturing jobs.
He also leads a bipartisan group pressing for legislation that would require the Commerce Department to apply countervailing duties against countries with undervalued currencies.
The lawmakers contend China's currency is undervalued by 25 percent to 40 percent against the U.S. dollar, giving Chinese exporters an unfair price advantage.
Those complaints could intensify in coming months, with U.S. unemployment remaining near 10 percent and one-third of the Senate and all the House of Representatives up for re-election in November. That includes Schumer.
China loosened its currency, known as the yuan, from a near two-year peg to the dollar on June 19. Since then, the yuan has strengthened just 0.8 percent against the dollar.
"China's expanding trade surplus tells us two things. First, China is back to its same old mercantilist tricks. Second, China's currency announcement was a sham," Scott Paul, executive director of the Alliance for American Manufacturing, said in a statement.
The House Ways and Means Committee has set a hearing on China's currency practice for Sept. 15 and is expected to hear testimony from Representative Tim Ryan, who is pushing legislation similar to Schumer's bill.
"We look forward to working with the House and Senate to pass China currency legislation that will put Americans back to work," Paul said.
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