George Voinovich: “I also urge my colleagues to read a paper by the staff of the International Monetary Fund entitled ``Putting the Cart…”

“I also urge my colleagues to read a paper by the staff of the International Monetary Fund entitled ``Putting the Cart Before the Horse: Capital Account Liberalization and Exchange Rate Flexibility in China.'' That is a January publication by the IMF. I would have asked it be printed in the Record, but it is 30 pages long and I do not want to burden the Congressional Record with 30 pages. If my colleagues are interested in getting a copy of that article, I would be more than happy to supply it. These papers show how exchange rate flexibility will facilitate economic development in China and why China does not have to wait until its banking system is more fully developed to move toward a flexible exchange rate. Moreover, they note that China does not need to immediately float its currency to remedy the problems caused by an undervalued currency. All China needs to do is take steps in that direction, such as adopting a wider exchange rate ban or pegging the exchange rate to a basket of currencies instead of the dollar alone, for example, a basket of currencies in the ASEAN countries, including Japan. Either of these policies would likely cause an upward revaluation of the yuan. Unfortunately, the Bush administration has refused meaningful action to get China to move toward a flexible exchange rate.…”