The US Treasury Department declined to label China a currency manipulator in its latest Semi-Annual Report to Congress on International Economic and Exchange Rate Policies, released on Wednesday, but acknowledged China’s currency remains “significantly undervalued.” In its report, Treasury noted that China's real exchange rate has appreciated 12 percent against the US dollar since June 2010, and by 45 percent against the dollar since 2005. However, the report states that there is “evidence that China has resumed large-scale purchases of foreign exchange this year” which is “suggestive of actions that are impeding market determination and a currency that is significantly undervalued.” In July of this year, the International Monetary Fund (IMF) estimated that the RMB was moderately undervalued by 5 to 10 percent. China was last listed as a currency manipulator in 1994 under the Clinton administration.
The US-China Business Council (USCBC) continues to advocate for China to move towards a fully market-driven exchange rate. USCBC supports the Obama administration's efforts to engage China on this issue, and opposes legislative proposals in Congress that would impose tariffs based upon highly subjective estimates of the "true" exchange rate.
Section 3004 of the Omnibus Trade and Competitiveness Act of 1988 requires Treasury to report semi-annually to Congress on other countries' exchange-rate policies. According to the act, Treasury must pursue negotiations at the IMF or through a bilateral forum with any country it labels a currency manipulator.
Obama to Announce SelectUSA Expansion
President Obama is set to announce the expansion of the Department of Commerce’s SelectUSA program at an Investment Summit held in Washington, DC. According to a White House press release, the expansion will coordinate “global teams,” led by Ambassadors, to create targeted, country-specific investment strategies in 32 markets. The expansion would also create a single, dedicated contact for foreign investors interested in investing in the United States, and launch a “coordinated advocacy process” to help facilitate outreach to investors among senior and international government officials.
The Administration has also proposed adding more than 100 new staff to the SelectUSA program to target foreign investors and boost FDI in the United States. Funding for the expansion would require $20 million, and was included in the President’s latest budget request, which has not yet been approved.
USCBC members are strongly supportive of foreign investment in the United States, given the critical role it plays in the US economy. Rhodium Group has estimated that Chinese investors have invested more than $12 billion in the US for January – September 2013, and more than $35 billion since 2000.