“We are harming you. But if you defend yourself, you're going to start a fight,” said Asia Society Executive Vice President Jamie Metzl, referring to the proposal by the U.S. Senate aimed at punishing China for keeping the yuan undervalued. In an interview hosted by Matt Miller on the Bloomberg television program Fast Forward, Metzl debated the China currency bill with Dan Ikenson, associate director for trade policy at the Cato Institute.
The bill proposed in the Senate would let U.S. companies seek duties to compensate for what it calls “misaligned” currencies. The U.S trade deficit with China rose to a record $29 billion in August this year, as imports from the nation were the highest ever. The deficit with China, some argue, means that U.S. companies that can't compete with cheap Chinese goods must either lower their costs or go out of business. To lower their costs, many companies have started outsourcing to India and China, which many say adds to U.S. unemployment.
But the proposal, favored by President Obama, has drawn critics from both sides, as the measures could have far-reaching consequences for U.S.-China trade relations, including the possibility of a confrontation between the global economic powers. So far, the U.S. has postponed a report on the exchange-rate policies of its trading partners, including China. And despite a 63-35 vote in the Senate, House Speaker John Boehner has declared the proposal “dead on arrival.”
Watch the video to listen to both sides of the debate.