Sunday, October 3, 2010
The former U.S. trade representative, Susan Schwab, says that - while there's a very real problem in terms of China artificially keeping the renminbi low - the Congressional bill calling China a currency manipulator and threatening trade sanctions isn't the way to solve anything.
Schwab calls it "a signal-sending exercise during an election season". She says that the bill won't really do anything, even if the Senate passes it and it is signed into law. Schwab says it "makes no sense", won't solve any problems, will escalate tensions, and will only divert attention from the real trade problems between the U.S. and China.
Indeed, Schwab warns that other countries might decide that this U.S. bill means that its open season for addressing currency manipulation, and that other countries believe that the U.S. is manipulating our currency. She says there could be a "boomerang effect" from the legislation.