Time to Get Tough on China Trade, Say Senators

A bipartisan group of senators is pushing legislation in Congress this week that could level the playing field between hurting American companies and Chinese companies.

A bipartisan group of senators is pushing legislation in Congress this week that could level the playing field between hurting American companies and Chinese companies benefiting from a devalued Chinese currency and workers that get extremely low wages.

“How much longer is Congress willing to stand by and watch thousands of jobs move to China? … It’s time to put American jobs and American workers first,” Sen. Sherrod Brown (D-Ohio) said in a statement last month.

Around 2.8 million U.S. jobs, including more than 1.9 million manufacturing jobs, have been eliminated or displaced since 2001 due to the growing U.S.-China trade deficit, according to a recently released report from the Economic Policy Institute, a non-partisan think tank. That’s about 2 percent of U.S. employment over that period.

The trade deficit consists of how much more money China is bringing in from American purchases of Chinese goods than Americans are bringing in from Chinese purchases of American goods.

The United States’ trade deficit with China was at $84 billion in 2001, which was the year that China entered the World Trade Organization and gained greater access to the U.S. market. By 2010, the deficit had ballooned to $278 billion.

The senators and many leading economists agree that behind the imbalance is the Chinese regimes’ devaluation of its currency, the Yuan, and sometimes inhumanely low wages.

“China’s history of half-truths and broken promises on currency makes passing this legislation an economic imperative,” said Sen. Chuck Schumer (D-N.Y.), a bill co-sponsor, in a statement on Sunday. “I hope both parties will come together to pass this bill next week.”

A powerful member of the Senate who could potentially replace Senate Majority Leader Harry Reid, Schumer went to Neversink Glass, an architectural glass and metal subcontractor, in White Lake, N.Y., on Sunday to emphasize his support for the bill, officially titled the Currency Exchange Rate Oversight Reform Act of 2011.

Neversink Glass was outbid on several construction projects by Chinese companies that offered lower prices.

Schumer says it was because of the undervalued Yuan that a Chinese company got materials for cheaper and could offer a lower bid. The Chinese companies also pay their workers much less, only a few dollars an hour and sometimes even less.

“The Chinese companies even had front organizations in New York City, hiding the fact that Chinese firms were behind the bid and compromising the entire process,” according to Schumer’s office.

In cases where Neversink was outbid by Chinese companies, Schumer says the job done ended up being subpar.

“As has happened several times, after the work was done, the glass was either installed hastily or just incorrectly, and the safety of the building was compromised. This led to increased project costs and in turn the project had to go back out to bid again, making constructions costs all the more expensive,” according to a release.

The proposed legislation would create objective criteria for monitoring China’s undervaluation of the Yuan and would slap tariffs on their goods to level the playing field.

Right now, the issue of China’s currency is mixed up with the president’s foreign policy objectives with China. The legislation would seek to effectively separate the matter out, requiring a president to ask Congress to ignore an imbalance if it is objectively found. The bill counts on the fact that no U.S. president would want to be in the position of ignoring such an imbalance, especially in this economy.