U.S. lawmakers pressed Treasury Secretary Timothy Geithner on Thursday to name China a currency manipulator and do more to address the undervaluation of the yuan, which they say hurts America's economy and adds to U.S. unemployment.
At times, the testimony before the Senate Committee on Banking, Housing and Urban Affairs was heated and the questions were direct. But the message from Democratic Committee Chairman Christopher Dodd of Connecticut and other lawmakers was persistent and clear.
"The time for action has long since come," said Christopher Dodd. "In fact, it is long overdue. For three decades, I've served on this committee and I've listened to every administration - Democrats and Republicans from Ronald Reagan to the current administration, producing the same results. China does basically whatever it wants, while we grow weaker and they go stronger."
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Dodd noted that unlike some of his colleagues, he is not running for re-election in November and that his remarks were motivated solely by what he said is his conviction to do more to engage China on the issue.
He said that although dialogue has helped produce some meaningful reforms, it clearly has not done enough.
Senator Charles Schumer, a Democrat from New York, was more forceful, demanding that the treasury secretary and the Obama administration label China a currency manipulator. Schumer is the sponsor of a bill on China's currency that could tax Chinese imports in response to Beijing currency manipulation.
"I am increasingly coming to the view that the only person in this room who believes China is not manipulating its currency is you," said Charles Schumer. "So the question I am asking is: 'What is the administration afraid of when every month, we lose jobs and wealth that we will never recover?'"
Secretary Geithner agreed that the situation was serious and voiced the administration's concern. He agreed that China is not allowing its currency to move in a meaningful direction, and noted that even though Chinese officials said in June that they would allow for more flexibility the currency has not risen enough.
Geithner said that naming China a currency manipulator in a bi-annual report that his department is required to release on foreign currencies would do little to solve the problem.
"We are concerned, as are many of China's trading partners, that the pace of [currency] appreciation has been too slow and the extent of appreciation too limited," said Timothy Geithner. "And we are examining the important question of what mix of tools - those available to the United States and multilateral approaches - might help encourage the Chinese authorities to move more quickly."
Geithner said that it is past time for China to move on the currency issue and listed ending Chinese currency and other trade distortions as "core objectives" of the administration.
The treasury secretary also noted that the U.S. is working to get the Chinese government to focus more on changing its export oriented growth model to focus more on domestic demand. He also said leveling the playing field for American companies in China was another core objective of the administration.
Geithner said the trading concerns that the United States has with China are issues that other countries are dealing with as well.
"And the more effective we are in making these international issues, multilateral issues, in my view, the more likely we are going to have impact on their behavior," he said.
After his hearing with the Senate Banking Committee, Geithner testified before the House of Representatives' Ways and Means Committee on the currency issue as well.
Several lawmakers have filed bills that threaten retaliatory action against China, if it fails to let the value of its currency rise more quickly.
Geithner told lawmakers that the Obama administration is ready to work with Congress on a more effective strategy.
What lawmakers and the administration will ultimately do is still unclear. While there are calls for action and the passage of legislation to punish China for its currency policies, there are concerns that some measures could have a negative impact on the broader U.S. economy.
