[House Report 118-291]
[From the U.S. Government Publishing Office]


118th Congress    }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 1st Session      }                                     {       118-291
 
======================================================================



 
              CHINA EXCHANGE RATE TRANSPARENCY ACT OF 2023

                                _______
                                

December 1, 2023.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. McHenry, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 839]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 839) to require the United States Executive 
Director at the International Monetary Fund to advocate for 
increased transparency with respect to exchange rate policies 
of the People's Republic of China, and for other purposes, 
having considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``China Exchange Rate Transparency Act 
of 2023''.

SEC. 2. FINDINGS.

  The Congress finds as follows:
          (1) Under Article IV of the Articles of Agreement of the 
        International Monetary Fund (IMF), the People's Republic of 
        China has committed to orderly exchange rate arrangements, the 
        avoidance of exchange rate manipulation, and cooperation with 
        the IMF to ensure ``firm surveillance'' of the exchange rate 
        policies of the People's Republic of China. Pursuant to Article 
        VIII of the Articles of Agreement of the IMF, the IMF may 
        require the People's Republic of China to furnish data on gold 
        and foreign exchange holdings, including assets held by non-
        official agencies of the People's Republic of China.
          (2) In its November 2022 report, entitled ``Macroeconomic and 
        Foreign Exchange Policies of Major Trading Partners of the 
        United States'', the Department of the Treasury concluded, 
        ``China provides very limited transparency regarding key 
        features of its exchange rate mechanism, including the policy 
        objectives of its exchange rate management regime and its 
        activities in the offshore RMB market.''. The Department 
        continued: ``China's lack of transparency and use of a wide 
        array of tools complicate Treasury's ability to assess the 
        degree to which official actions are designed to impact the 
        exchange rate.''.
          (3) In that report, the Department further noted that 
        ``China's failure to publish foreign exchange intervention and 
        broader lack of transparency around key features of its 
        exchange rate mechanism make it an outlier among major 
        economies and warrants Treasury's close monitoring.''.

SEC. 3. ADVOCACY FOR INCREASED EXCHANGE RATE TRANSPARENCY FROM CHINA.

  The Secretary of the Treasury shall instruct the United States 
Executive Director at the International Monetary Fund (in this Act 
referred to as the ``IMF'') to use the voice and vote of the United 
States to advocate for--
          (1) increased transparency from the People's Republic of 
        China, and enhanced multilateral and bilateral surveillance by 
        the IMF, with respect to the exchange rate arrangements of the 
        People's Republic of China, including any indirect foreign 
        exchange market intervention through Chinese financial 
        institutions or state-owned enterprises;
          (2) in connection with consultations with the People's 
        Republic of China under Article IV of the Articles of Agreement 
        of the IMF, the inclusion of any significant divergences by the 
        People's Republic of China from the exchange rate policies of 
        other issuers of currencies used in determining the value of 
        Special Drawing Rights; and
          (3) during governance reviews of the IMF, stronger 
        consideration by IMF members and management of the performance 
        of China as a responsible stakeholder in the international 
        monetary system when evaluating quota and voting shares at the 
        IMF.

SEC. 4. SUNSET.

  This Act shall have no force or effect on or after the date that is 
30 days after the earlier of--
          (1) the date that the United States Governor of the IMF 
        reports to the Congress that the People's Republic of China--
                  (A) is in substantial compliance with obligations of 
                the People's Republic of China under the Articles of 
                Agreement of the IMF regarding orderly exchange rate 
                arrangements; and
                  (B) has undertaken exchange rate policies and 
                practices consistent with those of other issuers of 
                currencies used in determining the value of Special 
                Drawing Rights; and
          (2) the date that is 7 years after the date of the enactment 
        of this Act.

                          PURPOSE AND SUMMARY

    Introduced on February 6, 2023, by Representative Dan 
Meuser, H.R. 839, the China Exchange Rate Transparency Act of 
2023, requires the U.S. Executive Director at the International 
Monetary Fund (IMF) to advocate for greater transparency in 
China's disclosure of its exchange rate policies. The bill is 
particularly important as it requires the Department of 
Treasury (Treasury) to push the IMF to publish divergences 
between Chinese policies and those of other major economies. 
The bill also requires Treasury to urge IMF members to take 
China's lack of transparency into account when considering 
increases to its shareholding at the Fund.

                  BACKGROUND AND NEED FOR LEGISLATION

    The IMF's Articles of Agreement (Articles) require member 
countries to ``collaborate with the Fund and other members to 
assure orderly exchange arrangements and to promote a stable 
system of exchange rates.'' According to the Articles, IMF 
members shall ``avoid manipulating exchange rates or the 
international monetary system to order to prevent effective 
balance of payments adjustment or to gain an unfair competitive 
advantage over other members.''\1\ While Treasury does not 
consider China to be a currency manipulator under current legal 
standards, it has expressed concerns that Beijing's exchange 
rate practices are opaque, challenging the Department's 
abilities to monitor the economy effectively. According to 
Treasury's November 2022 foreign exchange report: ``China's 
lack of transparency and use of a wide array of tools 
complicate Treasury's ability to assess the degree to which 
official actions are designed to impact the exchange rate.''\2\ 
IMF reports are similarly limited in their insights, 
undermining the Fund's ability to ``exercise firm surveillance 
over the exchange rate policies of its members,'' as laid out 
in its Articles.
---------------------------------------------------------------------------
    \1\Article IV, Section 1.
    \2\Macroeconomic and Foreign Exchange Policies of Major Trading 
Partners of the United States, Department of the Treasury, November 
2022, p. 21.
---------------------------------------------------------------------------

                                HEARING

    Pursuant to clause 3(c)(6) of rule XIII, the following 
hearing was used to develop H.R. 839: The Committee on 
Financial Services held a hearing on February 7, 2023, titled 
``Combatting the Economic Threat from China.''

                        COMMITTEE CONSIDERATION

    The Committee on Financial Services met in open session on 
February 28, 2023, and ordered H.R. 839 to be reported 
favorably to the House as amended by a recorded vote of 36 ayes 
to 0 nays (Record vote no. FC-20), a quorum being present. 
Before the question was called to order the bill favorably 
reported, the Committee adopted an amendment in the nature of a 
substitute offered by Mr. Meuser by voice vote.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                      COMMITTEE OVERISGHT FINDINGS

    Pursuant to clause 3(c) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the goal of H.R. 839 is to create 
greater transparency in China's disclosure of its exchange rate 
policies.

                 CONGRESSIONAL BUDGET OFFICE ESTIMATES

    Pursuant to clause 3(d)(1) of House rule XIII, the 
Committee adopts as its own the cost estimate prepared by the 
Director of the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    Pursuant to clause 3(c)(2) of rule XIII of the Rules of the 
House of Representatives, the Committee adopts as its own the 
estimate of new budget authority, entitlement authority, or tax 
expenditures or revenues contained in the cost estimate 
prepared by the Director of the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1973.

                       FEDERAL MANDATES STATEMENT

    Pursuant to section 423 of the Unfunded Mandates Reform 
Act, the Committee adopts as its own the estimate of the 
Federal mandates prepared by the Director of the Congressional 
Budget Office.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         EARMARK IDENTIFICATION

    Pursuant to clause 9 of rule XXI of the Rules of the House 
of Representatives, the Committee has carefully reviewed the 
provisions of the bill and states that the provisions of the 
bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    DUPLICATION OF FEDERAL PROGRAMS

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes a program of 
the Federal Government known to be duplicative of another 
Federal program, including any program that was included in a 
report to Congress pursuant to section 21 of the Public Law 
111-139 or the most recent Catalog of Federal Domestic 
Assistance.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Sec. 1: Short title

    This Act may be cited as the ``China Exchange Rate 
Transparency Act of 2023''.

Sec. 2: Findings

    This section sets out a number of findings regarding the 
People's Republic of China's (PRC) opaque policies surrounding 
its exchange rate.

Sec. 3: Advocacy for increased exchange rate transparency from China

    This section instructs the U.S. Director at the IMF to use 
the voice and vote to advocate for greater transparency in 
China's disclosure of its exchange rate policies.

Sec. 4: Sunset

    This section holds that the policies in the bill expire no 
later than 30 days after the earlier of the following: the PRC 
is in compliance with the IMF Articles of Agreement and has 
undertaken exchange rate policies consistent with other 
countries, or seven years.

                                  [all]