Cliff Stearns: “since 1994 China has pegged its currency, the yuan, to the United States dollar. Many economists contend that for the…”

“since 1994 China has pegged its currency, the yuan, to the United States dollar. Many economists contend that for the first several years of this peg, the fixed value was likely close to market value, but in the past few years, economic conditions have changed, such that the yuan would likely have appreciated, like virtually every other currency, if its exchange rates were determined by simple market forces. This policy constitutes a form of currency manipulation and is intended to give China an unfair trade advantage. Also, it is contributing to the loss of United States manufacturing jobs. China's currency is significantly undervalued vis-a-vis the United States dollar. Some experts contend that it is undervalued by as much as 40 percent, making Chinese exports to the United States cheaper and U.S. exports to China more expensive than they would be if market forces determined the exchange rates. Furthermore, the undervalued currency has contributed to the large U.S. trade deficit with China. It has hurt United States production and employment in several U.S. manufacturing sectors, such as textiles and apparel and furniture, that are forced to compete domestically and internationally against artificially low-cost goods from China. If the yuan is undervalued against the dollar, imported Chinese goods are cheaper than they would be if the yuan were market-driven.…”