On China, Obama says U.S. must address currency rates

By Matt Spetalnick and Jeff Mason

WASHINGTON (BestGrowthStock) – President Barack Obama vowed on Wednesday to address currency rates with economic partners such as China and to get tougher with them on trade to ensure that U.S. goods do not face a competitive disadvantage.

With U.S.-Chinese relations already troubled by Washington’s planned arms sales to Taiwan, Obama said his administration was pushing China and other countries to enforce trade rules and open their markets.

But he insisted he had no intention of taking a protectionist stance toward China, the world’s third-largest economy, warning that “to close ourselves off from that market would be a mistake.”

Still, Obama had stern words for the Chinese as he addressed senators from his Democratic Party at a time of rising Sino-U.S. tensions, including Beijing’s anger over his plan to meet exiled Tibetan spiritual leader the Dalai Lama.

“The approach that we’re taking is to try to get much tougher about enforcement of existing rules, putting constant pressure on China and other countries to open up their markets in reciprocal ways,” Obama said.

“One of the challenges that we’ve got to address internationally is currency rates and how they match up to make sure that our goods are not artificially inflated in price and their goods are artificially deflated in price. That puts us at a huge competitive disadvantage.”

Underscoring U.S. concerns, Republican Senator Charles Grassley urged Obama to formally label China as a currency manipulator to get Beijing’s attention that it needs to raise the value of its yuan. Obama so far has resisted that step.

U.S. manufacturers have complained for years that Beijing’s currency policies give Chinese companies an unfair price advantage in international trade. China says its exchange rate policy is an internal matter.

YUAN SEEN AS UNDERVALUED

A recent report by the Peterson Institute for International Economics estimated China’s yuan was undervalued by about 30 percent against all world currencies and about 40 percent against just the dollar.

The Washington think-tank also said four other East Asian economies — Hong Kong, Malaysia, Taiwan and Singapore — needed to let their currencies rise in value.

Since taking office, Obama has twice declined to formally label China as a currency manipulator but faces a third decision on that issue in April.

On Wednesday, Obama pushed back against a question about whether he would back revising or revoking a China trade treaty from Senator Arlen Specter, who accused Beijing of subsidies and dumping that was “a form of international banditry.”

“Our future is going to be tied up with our ability to sell products all around the world, and China is going to be one of our biggest markets,” Obama said.

“It’s got to be reciprocal. So if we have established agreements in which both sides are supposed to open up their markets, we do so and then the other side is imposing a whole set of non-tariff barriers in place, that’s a problem. And it has to be squarely confronted.”

Obama imposed a “safeguard” tariff on some tire imports from China last year.

Obama cited China’s authoritarian system while urging U.S. lawmakers to overcome obstacles and act faster on alternative energy, where he said the Chinese were making strides.

“Now, they’re not a democracy and so they don’t debate,” Obama said to laughter. “When it comes to some key issues like energy, we are at risk of falling behind.”

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(Editing by John O’Callaghan)

On China, Obama says U.S. must address currency rates