The US Congress Takes A Hard Line On China'S Exchange Rate Regime.

2011/8/12 17:32:00 59

Official figures released on Thursday showed that the US trade deficit with China increased by nearly 12% in the first half of this year, which could lead to a tough attitude of the US Congress on China's exchange rate regime.

But analysts said the congressional move could still be lost, leaving President Obama with diplomatic difficulties to prepare for the November APEC summit in Honolulu.

Despite repeated promises by the Chinese and American governments to restore trade balance, the United States is against China in the first half of this year.

Trade

The deficit amounted to $133 billion 400 million, up from $119 billion 400 million in the same period last year.

The US trade deficit with China in June was US $26 billion 700 million, the highest since September 2010 and the fifth highest.

Many US Congressmen and manufacturers blame China's unfair trade practices on its huge trade deficit with China.

They complain that Chinese people underestimate the RMB exchange rate and make their enterprises gain huge price advantage in international trade.

U.S.A

manufacturing industry

Scott Paul, executive director of the alliance, said: "cracking down on unfair trade mechanisms, including manipulating exchange rates, should be the top of the trade agenda.

But the reality is that the topic has been shelved. Neither the leaders of the house and Senate clearly stated that this is the top priority of the legislature.

The central parity of the yuan against the US dollar hit the biggest two day increase since February 2008 on Wednesday and Thursday, suggesting that China may be prepared to change its exchange rate policy to curb domestic inflation pressure.

But Paul said,

RMB

The dollar pegging mechanism has only eased slightly in the past year.