Manzullo challenges Greenspan on China currency

House Small Business Committee Chairman Don Manzullo (R-IL) today challenged Federal Reserve Board Chairman Alan Greenspan's recent statement that a revaluation of China's currency—the yuan—would have little positive impact on the U.S. manufacturing sector.

Manzullo, a House leader on efforts to force China to stop manipulating its currency to the detriment of U.S. manufacturers, sent a letter to Chairman Greenspan today taking issue with Greenspan's June 23 testimony in front of the Senate Finance Committee. During the testimony, Greenspan said, "Some observers mistakenly believe that a marked increase in the exchange value of (China's currency) relative to the U.S. dollar would significantly increase manufacturing activity and jobs in the United States. I am aware of no credible evidence that supports such a conclusion."

In his letter to Greenspan, Manzullo stated there is a "host of credible evidence demonstrating that (increasing) the value of China's currency would improve the state of manufacturing in the United States." Manzullo pointed out that during the same hearing in which Greenspan testified, a manufacturer from Rhode Island representing the National Association of Manufacturers presented a comprehensive analysis of why a Chinese yuan revaluation upward would have a positive benefit on U.S. trade and our domestic manufacturing base.

That analysis, from Al Lubrano of Technical Materials from Lincoln, Rhode Island, stated that revaluing the yuan would "lessen or remove China's artificial price advantage in the U.S. market, would reduce the rate of growth of U.S. imports from China by market mechanisms, and would tend to boost U.S. exports - while also benefiting the Chinese economy and doing no harm to U.S. capital markets." The full analysis can be accessed at www.nam.org.

Manzullo encouraged Greenspan and his staff of economists to consult with the National Association of Manufacturers (NAM) and other business groups to ensure the Fed has all the critical information it needs when making decisions that affect the U.S. manufacturing sector.