A Nebraska Congressman says how China handles its currency has a big impact on the American economy.
Congressman Jeff Fortenberry supports a bill that calls on China to quit keeping its currency artificially low. He says he has no fear that passage of the bill would trigger a trade war.
“No. We’re already in a trade war with China, there’s no fear of that, and they’re winning,” according to Fortenberry. “We shifted a huge amount of manufacturing over there and, again, the manipulation of their currency along with the problem of their lower embedded cost of production simply because they don’t have the rules of the game the same way that we have.”
Fortenberry says that keeping its currency artificially low, China undercuts its American competitors. Its exports to the United States are cheaper, while US imports to China are more expensive. The congressman says that has fueled a trade imbalance that has grown from approximately $10 billion 20 years ago to around $270 billion now.
The problems created extend beyond simply economic concerns, says Fortenberry. He says the trade imbalance has allowed China to get American dollars which it has used to buy American debt. Fortenberry calls it a very dysfunctional relationship.