October 4, 2006 – A recent report from the Economic Policy Institute has found that China has violated all established currency manipulation standards, causing damaging effects to the U.S. economy.
Key findings from the EPI Report include:
• The bilateral U.S.-China surplus was $203 billion for 2005. This total has risen by $119 billion over the past five years and represents over 9 percent of China’s total GDP. There have been nine cases where damaging currency manipulation was found. In seven of those cases, the U.S. bilateral trade deficit was lower than 9 percent. In May 1992 – the first time China was found guilty of currency manipulation – its surplus with the U.S. was only 3.4 percent of China’s GDP.
• The rapid growth of the total U.S. trade deficit since 1997 has displaced jobs in the tradable-goods sectors of the U.S. economy – primarily manufacturing jobs. The ratio of domestic production to domestic consumption in the U.S. manufactured goods market dropped from 92 percent in 1997 to 78.2 percent in 2005 – Chinese manufacturing imports were responsible for just over 36 percent of this decline.
Read the entire EPI Policy Memo here.