[Congressional Record (Bound Edition), Volume 157 (2011), Part 11]
[Senate]
[Pages 15081-15083]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        CHINA'S CURRENCY POLICY

  Mr. BROWN of Ohio. Mr. President, in an hour or so, the Senate will 
be voting on our currency bill, S. 1619, the bipartisan bill I am a 
prime sponsor on, along with Senators Schumer, Graham, and Sessions, 
and a host of other Senators in both parties, including Senators 
Stabenow, Snowe, Collins, and Hagan.
  I thank my colleagues for the vote last week of well in excess of 60 
bipartisan votes, allowing us to consider this measure. I am struck by 
some of my colleagues who dismiss this bill as a ``message'' bill. 
There are opponents of the bill, and there are always people

[[Page 15082]]

who don't want to stand up to China. I think they are undercutting our 
ability to stop the hemorrhaging of our manufacturing jobs. That is 
their decision to make. Again, I am struck by how some of my colleagues 
dismiss this as a message bill. I don't know what a message bill means 
to anybody outside of Washington. I know this bill is a jobs bill. I 
was talking to an anchor on MSNBC, who said we lost almost 3 million 
jobs to China in the last decade, most of them manufacturing jobs. This 
is legislation that will stand up to the Chinese and say: You are not 
going to game the currency system or export from China into our market 
and have a 25-, 30-, 35-percent subsidy, and you are not going to put 
up a tariff using currency as that tariff, by and large, in effect, to 
add 25, 30, 35 percent to the cost of an American good sold into China.
  This legislation is all about jobs in industries that have been 
holding on for their life, such as paper, steel, tires, and aluminum. 
But it is not just paper, steel, and tires; it is no longer a trade 
deficit in T-shirts and bicycles. This trade deficit, which has more 
than tripled in the last decade, is now almost $800 million a day. That 
means every day companies buy $800 million more in Santa Fe and in 
Dayton than we sell to China. We buy $800 million more than we sell. We 
cannot keep doing that.
  This trade deficit has risen through the economic food chain all the 
way to advanced technology products. It is not just tires and steel, as 
important as they are to many workers in this country; it is also jobs 
in solar, wind, and clean energy components manufacturing, and in the 
auto supply chain. Those are millions of jobs in our country. What this 
legislation means in so many ways is that we can be competitive on all 
fronts with China, Germany, and Japan. We can compete on productivity. 
We have skilled workers and world class infrastructure. But how do you 
compete against a 25-, 30-percent subsidy? How can workers in Findlay 
who make tires or in Chillicothe who make paper or in Defiance who make 
engines compete with $1 billion in subsidies? As a leader in this 
effort, Senator Merkley noted currency manipulation is a 20- to 30-
percent tax on our exports. If a company in Albuquerque or Atlanta or 
Ashtabula makes a product and sends it to China, it costs 25, 30 
percent more because they put a currency tariff on that product.
  I find it hard to believe that some of my colleagues--about 30 of 
them--would want to continue this tax on our exporters. It is, pure and 
simple, a tariff and a tax on our exporters trying to sell products 
into the Chinese market.
  Senator Feinstein spoke about the compelling image she saw from her 
San Francisco home. Looking out at the San Francisco Bay, she counted 
the cargo ships departing for Asia, half filled with mostly scrap paper 
and other scrap, while the incoming ships are filled with goods. That 
tells you that we buy $800 million a day more from China than we sell 
to China. It is not because our workers are not productive or that our 
companies are not efficient or because our scientists and researchers 
aren't the most innovative in the world; it is because China has a 25-, 
30-, 35-percent tax on our products and a subsidy on their products. 
That is pure and simple.
  For a State such as mine, trying to get a foothold on clean energy 
technology research and production, the race against China will only 
accelerate in the coming years. That is why it is imperative that we 
not sit idly by while China subsidizes its exports through its currency 
regime. This is no message bill. This is level-the-playing-field 
legislation.
  Let me speak about some other charges that have been made. Some of my 
colleagues note that China's currency has increased about 30 percent in 
recent years. No doubt the RMB has appreciated about 30 percent. Since 
the Senate acted in 2005, the Chinese currency, the RMB, has 
appreciated about 30 percent. But as the Peterson Institute for 
International Economics has shown--which is not an anti-free trade, 
pro-fair trade, liberal, progressive, socialist organization; it is a 
middle-of-the-road, mostly free trade organization, staffed by sort of 
elite economists in the Northeast--Even the Peterson Institute for 
International Economics has shown that the RMB is more undervalued than 
a year ago because of China's rapid growth in the past few years, as 
well as inflation and productivity. The Peterson Institute estimates 
that China's currency manipulation increased from 24.2 percent in 2010 
to 28.5 percent in 2011, despite the fact that China's real exchange 
rate appreciated over the past year. That means it is getting worse. If 
we want to call it a message bill, it may work with some in this 
institution but not with the American public. This is getting worse and 
worse for our manufacturers. I will tell you about one, the Bennett 
brothers in Brunswick, Ohio, who came to me. I was talking to them in 
northeast Ohio a couple weeks ago. They run a family company that has 
been around for about 35 years in northeast Ohio. This company is 
called Automation Tool and Dye. They were about to have a million 
dollar sale to an American company looking for their product and, at 
the last minute, the Chinese came in and undercut them by 20 percent. 
Why? Because they got a 25-percent, 30-percent subsidy bonus because of 
their currency.
  The point is that China is massively and increasingly intervening in 
its currency. The International Monetary Fund knows it. The IMF has 
estimated that China's global current account surplus--the broadest 
measure of its trade balance--will more than double from $305 billion 
in 2010 to $852 billion in 2016. The problem is getting worse.
  If one thing is clear since the Senate voted in 2005 to slap tariffs 
on Chinese goods, it is this: The RMB is pegged to American political 
pressure. If we can predict anything, we know that if we take the 
pressure off, China will get worse. If we can predict another thing, we 
know that if this passes and begins to work its way through the House 
to the President's desk, the Chinese will respond by significantly 
appreciating their currency.
  Some of my colleagues wring their hands, saying we might set off a 
trade war, and that this is the second coming of Smoot-Hawley. The 
facts are clear that this is very different. When Smoot-Hawley was 
enacted by Congress, in those days the United States had a trade 
surplus. So countries around the world were angered that while we had a 
trade surplus we were enacting Smoot-Hawley, more tariffs. Today, we 
have one of the largest trade deficits in world history, so we are in a 
very different position.
  As Senator Sessions said, when he heard this criticism that we might 
set off a trade war, we have been in a trade war for a long time. The 
Chinese seem to be doing very well. They have declared a trade war. 
That is why they subsidize water, paper, steel, capital, and land. This 
features spies, features theft of intellectual property, and that 30-
percent stealth subsidy that gets applied to every export China sends 
to the United States. So we are already in a trade war. The only 
difference is that today on the floor of the Senate we have taken a big 
step toward abandoning the failed tactics of unilateral disarmament.
  Workers in my State know that we have been waving the white flag in 
this trade war. I remind my friends that the United States has more 
leverage than any of China's trading partners, as China is overly 
dependent on access to our market to maintain its own exports and jobs.
  This isn't Smoot-Hawley, as some want you to believe. This 
legislation does not mandate sanctions against China or any other 
nation. It does not slap an across-the-board tariff on Chinese imports 
tomorrow as China has effectively done to ours. In fact, if this bill 
becomes law, the duties would apply to less than 3 percent of Chinese 
imports.
  When you think about this, of all Chinese exports, about one-third 
come to the United States. If Senator Durbin is in business in Chicago, 
and he has a company--or he has a customer in his company who buys one-
third of all of their goods, he is going to be good to that customer. 
He will not declare war on them. The Chinese won't declare economic 
trade war on us, because we buy so many of their exports.

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  I will close with this. If China is found to be manipulating its 
currency, this bill sets in motion a series of steps to place pressure 
on the Chinese Government to stop rigging the exchange rate in its 
favor. It is simple.
  According to a recent New York Times op-ed by C. Fred Bergsten of the 
Peterson Institute:

       To be sure, some American corporations will fret that these 
     actions would needlessly antagonize the Chinese and threaten 
     a trade war. . . . I believe these fears are overblown. The 
     real threat to the world trading system is protectionist 
     policies, including undervalued currencies, of other 
     countries, and the vast trade imbalances that result.

  As Presidential contender Mitt Romney put it, taking action to remove 
protectionist market distortions would not result in a ``trade war,'' 
but failing to act will mean the United States has accepted ``trade 
surrender.''
  We can vote yes today and it will mean we will stand up to the 
Chinese and, more importantly, it will be a victory for American 
workers, and especially American small manufacturers.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Illinois.

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