Administration does not charge China with currency manipulation

I find it hard to believe that, every 6 months, the Bush administration comes to this conclusion.

The Bush administration said Tuesday that China does not meet the technical requirements of a country that is manipulating its currency to gain unfair trade advantages.

The administration did say Tuesday that “more flexibility in China’s exchange rate will help it achieve more balanced growth” and promote a number of other outcomes that would be economically beneficial.

But in the report it is required to deliver to Congress every six months, the administration said that no country met the “technical requirements for designation” as a currency manipulator.

China to produce 460 mln tons crude steel in 2007 – CISA

China’s crude steel production will increase around 11% […] in 2007, the China Iron
and Steel Association (CISA) said.
The CISA says 2006 crude steel production will rise 16.6% […] based on production statistics from the first nine months, new operations in the second half and market demand

NAM Board Votes In Favor Of Multinationals In Debate Over China’s Currency; Domestic Manufacturers Are Left Wondering What To Do

It’s beginning to look like NAM is thinking of itself as NABMM – National Association of Big Multinational Manufacturers.

While I’m not a big fan of protectionism, I’m even a smaller fan of currency manipulation. During the second world war, currency manipulation was used as a weapon of war. And it’s not clear to me that the current situation is all that different (except that there isn’t a side-by-side de-facto war going on).

I know the blogger in chief over at NAM reads this blog. I wonder if he’d like to hit the reply button and comment on this article. Has NAM really abandonned the small, domestic manufacturer?
For members of the National Association of Manufacturers’ Domestic Manufacturers Group, September 28 will be a day to remember. Their two-year effort to persuade NAM to endorse a currency manipulation bill was rejected by the association’s executive committee and board of directors. Members of the Domestic Manufacturers Group (DMG) claim the loss was the result of opposition from the large multinational corporations that benefit from China’s pegged currency working in concert with NAM’s senior leaders intent on quashing an uprising. NAM leaders counter that the legislation was not going to force a sovereign nation of 1.3 billion to change its policies any time in the near future.

The NAM board vote is not sitting well with many of the domestic manufacturers that put so much emotional energy into the initiative. These companies — particularly in the metal forming industries — are struggling to remain competitive with the multinationals’ Chinese production and Chinese suppliers. They believe that the multinational companies are the real “protectionists” — defending unfair subsidies that the Chinese government is erecting in their favor, especially a currency that is estimated to be at least 25 percent, and perhaps as much as 60 percent, undervalued.

In an e-mail sent to NAM president Gov. John Engler, Nucor chairman and CEO Dan DiMicco said, “John — You just don’t get it.” NAM’s refusal to acknowledge unfair trade as being the primary cause of declining U.S. industrial competitiveness is a “blatant stab in the back” to domestic manufacturers, DiMicco wrote Engler. NAM’s efforts “have shown us that the current NAM does not represent domestic manufacturing interests […]

Canada joins EU, U.S. against China on auto parts – Yahoo! Canada News

Yahoo! Canada News
OTTAWA (Reuters) – Canada joined the United States and the European Union on Friday in requesting a World Trade Organization panel to hear their complaint about China’s tariff treatment of foreign auto parts.”

“China continues to impose unfair tariffs on auto parts, in breach of its WTO commitments,” Trade Minister David Emerson said in a statement.

“Canada, the United States and the European Union are requesting the establishment of a WTO panel to secure compliance and fair market access for our domestic auto parts producers.”

Paulson calls for China economic reforms

Yahoo! News
Treasury Secretary Henry Paulson said Wednesday that he will urge the Chinese to move more quickly to adopt economic reforms, including a more flexible currency.

But in his first speech on the international economy since joining the Bush Cabinet in July, Paulson stressed that the administration will oppose efforts in Congress to punish China for a soaring trade gap with the United States.

“Protectionist policies do not work and the collateral damage from these policies is high,” he said. “We will not heed the siren songs of protectionism and isolationism.”

Paulson sought to lower expectations that he will achieve any major breakthroughs when he visits Beijing for two days of talks with Chinese officials next week. He stressed, instead, that he would discuss economic reforms that the Chinese need to pursue that would benefit the Chinese economy.

China’s steel prices drop, showing signs of overproduction

People’s Daily Online

Steel prices in China dropped in July after five consecutive month-on-month rises as overproduction began to hit the market.
A report released by the People’s Bank of China (PBOC) on Monday showed steel prices in July dropped 3.9 percent from June and 4.9 percent from the same month last year.
This was the first monthly decline since January, but the steel price still 11.9 percent up from the beginning of the year.
Analysts said the decline showed overproduction has begun to bite on the steel market.

China’s steel industry prepares for restructuring

Sometimes it’s hard to tell if things reported in the Chinese media actually mean anything or whether they’re just posturing. However, a number of people have said that the Chinese Steel industry is going to restructure, willingly or not, in the next 5 years.

People’s Daily Online
Industry leaders who have attended the fourth China International Steel Congress in Beijing early this week predict that a wave of merges and acquisitions is set to sweep China’s steel industry.
‘China’s steel industry will see large-scale restructuring in line with changing international environment and intensified competition,’ said Xu Lejiang, general manager of Shanghai Baosteel Group Corp.

bipartisan delegation to meet with members of China’s National People’s Congress

Don Manzullo and Adam Schiff will lead a bipartisan House delegation in meetings with members of China’s National People’s Congress in Washington, D.C. this week. Officials will discuss issues ranging from currency manipulation and China’s trade commitments to North Korea and Taiwan

I suppose this is worth watching, but I don’t know if it will accomplish much. At much higher levels, everyone’s saying “we aren’t going to do anything” …

By the way, and somewhat off topic, but isn’t Adam Schiff the name of the District Attorney in the early episodes of the original Law & Order? The congressman is here. He doesn’t look anything like Stephen Hill.

The Fed is going to make an announcement today … everyone is betting on interest rate hikes … that’s probably more relevant to metal stampers than yet another meeting where the chinese deny they’re manipulating …

China says no new steel mills, to close small ones

This might, indirectly and some time down the road, be good news to small metal stampers.

The current situation is that, in many cases, our ultimate customers can buy a finished product from China cheaper than we can buy the raw steel, never mind stamp it out. This is because, in China, steel is so cheap. And that, in turn, is because of the overcapacity in that marketplace.

A second factor is the currency manipulation currently going on in China. Of course, this won’t solve that second problem.

Reuters via Yahoo! Asia
China’s cabinet said it would not approve construction of any new steel mills and reiterated it would shut down small, outdated plants in an industry plagued with too much capacity and a raw material shortage.
The State Council also urged tighter controls on lending to and land use by industries plagued with overcapacity, including the aluminium, coke and automobile sectors.
‘In general, the problem of over-investment leading to a capacity surplus in some industries has not been solved completely,’ the State Council said in a document posted on the central government Web site ( on Monday.
The State Council said it would speed up mergers and closures of small plants in those industries this year.