Wes Hickman (202-224-5972) or Kevin Bishop (864-250-1417)
– U.S. Senator Lindsey Graham (R-South Carolina) today made the following statements on the announcement the Chinese have begun to revalue their currency. Graham, along with Senator Chuck Schumer (D-NY), have been leaders in pushing the Chinese to discontinue pegging their currency to the U.S. dollar at a rate of 8.28 yuan arguing it hurts American manufacturing.
“I’m pleased with the Chinese government’s decision to revalue the yuan,” said Graham. “While the initial revaluation was small, it is encouraging. They’ve taken a small first step which I hope over time will turn into more revaluations and the eventual floating of the Chinese currency.”
China set the value of the yuan at a level equal to 8.11 yuan to the dollar, an increase of about 2 percent. The Chinese also set up a mechanism to allow the yuan to fluctuate in value by as much as 0.3 percent per day. This mechanism allows the yuan to potentially increase gradually over time. The Chinese government will continue to manage the exchange rate.
“The most significant aspect of the announcement is it allows the Chinese to have a daily upward valuation of their currency,” said Graham. “This mechanism is the best indication they don’t view today’s two percent adjustment as the end of the road, but the beginning of a series of adjustments over time. It creates a process for continued upward adjustment to bring the Chinese currency in-line with its true value.”
The issue was brought to a head when Graham and Schumer offered their legislation calling for a 27.5 percent tariff on all Chinese goods entering the country as an amendment to the Foreign Affairs Authorization Act. A procedural motion to table the amendment was brought forward and soundly defeated in a bipartisan 67-33 vote. A majority of Republicans and Democrats opposed the tabling measure.
“In light of China’s decision, Malaysia has decided to begin revaluing their currency as well,” said Graham. “A revaluation of China and other Asian currencies will greatly benefit American manufacturers in the global economy. China is too strong of an economy to continue manipulating its currency to create a discount on its products. It’s been unfair to American manufacturing and put us at a competitive disadvantage.”
“By beginning to move away from pegging their currency, China will create a better climate for doing business,” said Graham. “Over time, it can become a win for both countries. That’s the goal Senator Schumer and I have hoped to achieve with our actions on this issue.”
Last month, after meeting with Treasury Secretary John Snow and Chairman of the Federal Reserve Alan Greenspan, Graham and Schumer agreed to postpone a pending July vote on their tariff legislation. Graham said he was convinced progress was being made on this issue and in light of this progress, it was appropriate to show flexibility.
“I’m appreciative of the attention the administration has placed on this issue,” said Graham. “I look forward to working with Secretary Snow and Chairman Greenspan to encourage China to continue to move to an eventual float of their currency.”