Bush to tell Japan, China to stop intervening in currency
Wednesday, October 15, 2003
WASHINGTON -- China and Japan should stop intervening in the currency markets in a way that gives them an unfair trade advantage, President Bush said Tuesday, the eve of a nine-day trip through Asia.
"Markets ought to be determining respective currencies," Bush said in an interview with Asian journalists.
The president's trip, which begins today, takes him to Japan, the Philippines, Thailand, Singapore, Indonesia and Australia.
He will meet with Chinese leaders in Bangkok on the sidelines of the Asia-Pacific Economic Cooperation forum, which is slated to run from Oct. 20 to 23.
Currency will be a topic of his talks with Japanese Prime Minister Junichiro Koizumi and Chinese President Hu Jintao.
The Japanese are intervening and buying dollars whenever the yen threatens to gain too much strength against the American dollar.
China is pegging its currency to the U.S. dollar, keeping its currency artificially low. U.S. manufacturers contend that the Chinese yuan is undervalued by as much as 40 percent, making their products cheaper for American consumers and U.S. products more costly for the Chinese.
During a trip to Beijing last month, Treasury Secretary John Snow urged the Chinese government to stop pegging its currency to the dollar at a rate unchanged since 1994. The Chinese rejected Snow's request, saying this was not the right time to allow the yuan to float because it could endanger China's fragile banking system.
Bush said he will keep pressuring China and Japan to stop intervening in the currency markets.
"We expect the markets to reflect the true value of currency -- that the way that currencies ought to be valued is based upon economic activity, a fiscal policy, monetary policy of the respective governments, the potential for growth, the potential for long-term viability of the economies," Bush said. "That's how our respective currencies ought to be valued. And, yes, we'll bring that up."
Focus on job creation
"I'm going to say that where there's trade imbalances, you know, countries need to be mindful that we expect there to be fair trade," Bush said. "And I fully understand the competitive world is one that I think is positive, so long as the competition is fair."
"My main focus here in America is there to be significant job creation," Bush said. "It looks like we're getting some positive results.
"Part of making sure that the job creation -- momentum of the job creation is viable is to make sure -- is to talk to our trading partners about fair trade," Bush said. "And there are some trade imbalances that I will be discussing."
In a letter to Bush on Tuesday, at least seven senators urged him to take action on the currency issue to stem the loss of millions of manufacturing jobs.
"The United States has lost some 3.2 million private sector jobs since early 2001, including 2.5 million manufacturing jobs," the letter said.
"More American jobs are in jeopardy. Doing nothing puts these jobs, our economy and our future at risk."