Manzullo calls China's currency revaluation "good news"

House Small Business Committee Chairman Don Manzullo (R-IL) today welcomed China's decision to unpeg its currency to the U.S. dollar, calling it a good first step to leveling the playing field for U.S. manufacturers competing with Chinese industries.

China today announced it no longer would peg its currency—the yuan—to the U.S. dollar, instead allowing it to float against a basket of foreign currencies. The move initially raised the yuan by 2.1 percent against the dollar, and economists expect the new basket formula to continue to increase the yuan over the next several months.

"This is certainly good news, but it's only a start. China will need to take further action to allow the yuan to continue to rise against the dollar and eventually float freely, ending the currency manipulation that has given Chinese companies an unfair competitive edge over U.S. manufacturers for more than a decade," said Manzullo, who discussed the ramifications of China's action with U.S. Treasury Secretary John Snow and U.S. Trade Representative Rob Portman this morning. Manzullo also discussed the issue during a meeting with President Bush on Wednesday.

In1994, China devalued its currency by about 30 percent and pegged its value to the U.S. dollar. Economists estimate Chinese companies gain up to a 40 percent price advantage over their U.S. competitors because of this currency manipulation. It is more expensive for U.S. manufacturers to sell into China and less expensive for Chinese companies to sell in the U.S.