China Policy: Currency Control as a Subsidy?

There seems to be an interesting set of bills working their way through Congress right now concerning China’s currency controls and how best to deal with them. It seems there are those who are trying to create legislation that will declare direct currency control as subsidy, allowing the U.S. to raise it’s own tariffs on goods created in those controlled-currency countries to match. The idea being: both are equally in violation of World Trade regulations.

There seems to be some dispute as to whether or not that would stand under international scrutiny. Opponents say it will not. This article does not get into revealing what the alternative legislation does.

The trouble I see here (and I might perhaps be completely naive, here) is that the Federal Reserve also controls U.S. currency, albeit more tangentially than does the direct government involvement in China. Further, one could argue that our current oil hegemony also controls not only the price of oil but also the worth of our dollars, since all oil is traded in U.S. currency and it therefore behooves other debtor nations to help keep our dollar strong so as not to make oil more expensive. Read American Theocracy for more on this subject.

I dunno, I’m not a macro-economist; hell, I didn’t even pass Math Course III in high school. But I found this tid-bit on Tom Reynolds interesting and amusing: – Labor, firms target China currency status

John Hoskins of the Curtis Screw Company in Buffalo, N.Y., lobbied Rep. Tom Reynolds (R-N.Y.) on the currency bill last year. Reynolds was serving as chairman of the National Republican Congressional Committee at the time, where he was tasked with winning political contributions from companies opposed to the China currency legislation.Reynolds called Hoskins personally to say he had decided to support the Hunter-Ryan bill, Hoskins said. This year, an aide to Reynolds said the congressman has not decided whether this year’s bill is the best option to tackle the issue of currency manipulation and is still studying the issue. Hoskins said he is again lobbying Reynolds to support this year’s Hunter-Ryan bill.

Woo Hoo! Way to (temporarily) go, Tom Reynolds! You’re (temporarily) a hell of a guy! Your (barring future political-inexpediency) unwavering support for this bill is a (arguable) credit to your (void where prohibited, may not include licenses and fees) character!

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By Tommy Belknap

Owner, developer, editor of DragonFlyEye.Net, Tom Belknap is also a freelance journalist for The 585 lifestyle magazine. He lives in the Rochester area with his wife and son.