ABC News' Matthew Jaffe and Jake Tapper report: The Obama administration today said in a semi-annual report to Congress that the Chinese renminbi is undervalued but did not cite China as a currency manipulator, a decision that instantly incurred the wrath of Republicans on Capitol Hill.
Noting that China on June 19 stopped pegging the renminbi to the dollar and allowed its exchange rate to appreciate, Treasury Secretary Tim Geithner said in a statement, “What matters is how far and how fast the renminbi appreciates. We will closely and regularly monitor the appreciation of the renminbi and will continue to work towards expanded U.S. export opportunities in China that support employment in the United States, in close consultation with Congress.”
But that approach was quickly met with vociferous opposition from Senate Republicans who blasted Treasury for not branding China as a currency manipulator.
Sen. Chuck Grassley, the ranking Republican on the Finance Committee, said, "As expected, the administration has again failed to identify China as a currency manipulator. China recently allowed a modest crawling peg of its currency exchange rates, but overall China’s currency is tightly controlled and mostly removed from market forces. So Treasury’s determination doesn’t match the facts."
"Everyone knows China manipulates its currency,” continued Grassley. “If the President continues to avoid acknowledging China’s currency manipulation and fails to address it in a meaningful way, Congress will have to act."
Lawmakers are outraged because they believe that the administration is not doing enough to get China to stop exchange rate policies that give the Chinese an unfair trade advantage over the US and cost American jobs.
Another Republican on the Senate Finance panel, Orrin Hatch, went even further than Grassley.
"I’d say this report is laughable if the consequences weren’t so dire," Hatch said. "It is beyond a reasonable doubt that China is manipulating its currency to put its employers at an unfair advantage over American companies. That is not right and the American people deserve an Administration who will forcefully address this crisis. If we want China to play by the rules and stop manipulating the [renminbi], then this administration has to stop putting out weak-kneed reports. This is a serious problem costing our nation countless jobs."
The Treasury report, as could be expected, also did not go over well with the Alliance for American Manufacturing, which put out a rather colorful – and timely – response, just hours before NBA star LeBron James announces which team he will sign for.
"Claiming China doesn't manipulate its currency makes about as much sense as saying LeBron James doesn't play basketball," said AAM Executive Director Scott Paul. "It's clear that China's announcement before the G-20 last month was nothing more than a charade, but the administration seems to have fallen for this rather unbelievable promise."
"Congress must pass strong legislation to address China's currency manipulation so that America's workers and businesses can compete on a level playing field," urged Paul. "We will never double exports unless we stop China's cheating. This is a step backward."
The uproar in the wake of today's report does not come as a surprise. At a June 10 hearing of the Finance committee, Geithner was criticized not only by Senate Republicans but also by Democrats for not being tough enough on China.
"We've heard a lot about the Chinese taking advantage of us and not a lot has been done," said the panel’s chairman Max Baucus. "I don't disagree with your intent and your goal, but I frankly am not yet persuaded that the administration has come up with something sufficient to address these concerns."
"I still want to know at what point you can stop the slow-dancing? At what point will we take stronger action?" asked Oregon Democrat Ron Wyden. "Is there a point, for example, where we say so many jobs have been lost that we have to take stronger action? Because we have heard this before."
“I don’t think anyone on either side of the aisle is satisfied with the results and that’s why we need to take stronger action than just diplomatic back and forth,” observed New York Democrat Chuck Schumer, who is leading a charge on Capitol Hill to pass a bill that would punish China for currency manipulation.
The report released today by Treasury was originally due to be released in April but was delayed by Treasury until after the recent G-20 summit in Canada. That decision, too, prompted outrage on the Hill, but now that the report is finally out – with Congress in recess no less – the outrage is no less apparent.
The Senate Banking Committee, said chairman Chris Dodd, will soon hold a hearing with Geithner to follow up on today’s report.