WASHINGTON — President Obama has put China’s currency policies front and center.
Obama and Chinese Premier Wen Jiabao had their longest and most “intensive” discussion about the issue on the sidelines of the United Nations General Assembly meeting in New York on Thursday, the White House said, as tensions between the two nations escalated on the eve of a vote in the U.S. Congress on a punitive bill targeting China’s currency.
The leaders’ bilateral meeting came after a week of tough talk that prompted concerns in the business community about a new trade fight over China’s allegedly undervalued currency. Critics say the yuan is undervalued by as much as 40 percent, putting U.S. products at a competitive disadvantage to China’s cheaper exports.
Against the backdrop of pressure by Congress, Obama and Wen publicly struck a more conciliatory stance on Thursday, but Obama privately expressed his disappointment to Wen on the pace of the yuan’s appreciation, according to a senior White House official, possibly looking to raise an issue for Democrats in the upcoming Congressional elections.
“The President reiterated that we have welcomed the Chinese announcement last June that they were going to pursue a more flexible exchange-rate policy and that they were going to tie their [yuan] to a basket of currencies,” the official told reporters during the daily White House press briefing. “They know that we were disappointed that there had not been much movement since then, that this had consequences for the global economy and for the U.S. economy and we look to see more…significant revaluation in the months to come.”
He said the President “made clear that we are expecting to see more action, more significant movement,” adding that Obama also warned Wen the U.S. will take actions against the Chinese if they don’t let the yuan appreciate. He cited the World Trade Organization as one possible venue for punitive action.
House Ways & Means Committee chairman Sander Levin (D., Mich.) has scheduled a markup on legislation for today that would allow the Commerce Department to treat currency manipulation as an illegal export subsidy and make it actionable under U.S. trade remedy laws by imposing punitive tariffs on imports. House Speaker Nancy Pelosi (D., Calif.) vowed her support of the bill Wednesday night, saying: “It is time for Congress to pass legislation that will give the administration leverage in its bilateral and multilateral negotiations with the Chinese government.”
The committee is expected to pass the legislation today, and Pelosi’s endorsement could pave the way for a full House vote as early as next week. But the prospects for currency legislation are less certain in the Senate, since both chambers will recess soon for the midterm elections.
Gary Hufbauer, senior fellow at the Peter G. Peterson Institute for International Economics, said that if enacted the legislation will be a “pretty big gauntlet” and make trade a centerpiece in the U.S.-Sino relationship, over foreign policy. The U.S. had a trade deficit of $226.9 billion with China in 2009, with apparel, computers and electronic products as major categories. But China also owns $846 billion in U.S. debt as of July, which has been seen as a key reason why the U.S. has tread lightly so far on the issue.
Importers are concerned about the heightened rhetoric between the two leaders and the bill before the committee today.
“[The legislation] would make the value of bringing a countervailing duty case much higher than it was previously,” said Nate Herman, vice president for international trade at the American Apparel & Footwear Association. “It will make it easier for these cases [brought by domestic industries] to make it to the investigation stage.”
David Spooner, an attorney with Squire Sanders and a former trade official for the Bush administration, said he doesn’t believe the bill before the committee today will spark a trade war in the short term, but it could lead to retaliation if enacted.
He said one of the biggest concerns of apparel and footwear companies is that China will unveil a major revaluation of 20 percent, for example, overnight and dramatically increase prices on the products that U.S. firms make there for export back to the U.S.
Stephanie Lester, vice president of international trade at the Retail Industry Leaders Association, said, “The majority of the business community does not think that currency legislation will be helpful. It would create more pain than gains.”
Domestic textile organizations support Congressional efforts to address China’s alleged currency undervaluation.
“The bill will finally give U.S. companies that have been damaged by China’s undervaluation a chance to prove within the unfair trading practices system whether that is the case or not,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition. “That’s all we’re asking for, our day in court to demonstrate that China’s currency practices are displacing our workers and putting our companies out of business.”
Tantillo said that pushing China to operate as a “reasonable and honest trading partner” will not trigger a trade war because the Chinese are well aware of how closely tied the two countries are economically and that they have too much to lose.
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews
“Stranger Things” is getting a new cast member for season 2. Meet @sadiesink_, the 15-year-old who will be joining the Netflix series for its new season. You may recognize her from “The Glass Castle” with Brie Larson and Woody Harrelson, but the Texas native’s next role goes in an entirely different direction. She describes her character, Max, as “a rough and tumble skater girl [who] becomes friends with the boys at school.” The second season debuts on October 27. (📷: @jgreenery) #wwdeye
Amid the Harvey Weinstein controversy, there’s another sector that’s being put under the spotlight for sexual abuse: the modeling industry. While rumors about abuse and sexual harassment of female and male models — and the photographers, agents and others who perpetrated it — have circulated within the fashion world for years, model @cameronrussell started posting stories from models on Instagram last week about abusive situations they’ve encountered — from sexual harassment and molestation to attempted rape. Over 75 have weighed in so far. Read more on WWD.com. Link in bio. #wwdnews
To celebrate its 16th anniversary, @dylanscandybar tapped designers and celebrities to create mosaics out of candy. The mosaics will be auctioned off to support the philanthropic cause of each participant’s choice. Pictured here is the mural created by @aliceandolivia's Stacey Bendet. For a first look at some of the other artwork being unveiled tonight, go to WWD.com. #wwdeye
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye