DISMAYED by China’s failure to play fair on free trade, we have offered legislation to impose a tariff on Chinese exports to the United States if Beijing continues to keep the value of its currency, the yuan, artificially low compared with the dollar.
Stephen Hanke makes a good case for opposing the tariffs but goes a bit astray with:
Washington’s modern-day mercantilists believe trade deficits can be managed by altering exchange rates.
Actually, it is the Chinese Central Bank managing the exchange rate, but Hanke sort of concedes the point arguing that allowing the yuan to float will likely have only a modest impact on relative prices. David Altig has more on this issue.
Update: AB reader Elaine points out this story from Xinhua, a Chinese business news organization:
The Bush administration’s effort to increase pressure on China to overhaul its currency regime got less than rave reviews from Federal Reserve Chairman Alan Greenspan and key central bankers from China, Europe and Japan. Greenspan disputed the contention of U.S. manufacturers that a revaluation of China’s yuan would make a significant impact on America’s soaring trade imbalances.
Maybe we should also outsource the reporting of business news to China!