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Monday, October 10, 2005 

US Trying to Ask Nice, Before Forcing Monetary Policy Change in China

WASHINGTON (AP) - American manufacturers view upcoming talks as critical for China to speed its currency reforms and help reduce soaring U.S. trade deficits. The big question is whether the Chinese see the meetings in the same way. […] American manufacturers contend that the yuan is undervalued by as much as 40 percent. That makes Chinese goods cheaper in the United States and American products more expensive in China and is a major reason for the trade gap, manufacturers believe.

Congress has reacted to the gap with calls for more forceful action. One measure with widespread support would impose 27.5 percent tariffs on all Chinese imports unless Beijing takes more steps to allow its currency to rise in value against the dollar.

Finally Washington seems to be trying to get tough with China, and quit ignoring the issue. I guess we will see if China willingly evens the playing field, or if we have to force the issue, potentially starting an economic war.