Magazine

Pressure Is Mounting To Revalue The Yuan


"Who wants the yuan to rise?" (News: Analysis & Commentary, Mar. 7) got it wrong. The National Association of Manufacturers has not "pulled out" of the campaign to address Chinese currency manipulation. In fact, the goals of NAM's 2005 China Trade Policy Agenda are an immediate revaluation of the currency. Although we withdrew support for a formal complaint against China, we did so only because the Administration had made clear that such a filing would be immediately rejected as counterproductive. Rather than commit resources to a filing that was to be rejected, we have vigorously waged this battle on many other fronts.

John Engler, CEO

National Association of Manufacturers

Washington

The trade data released by China's government continue to be misreported, giving corporations a false sense of security and preventing governments and international organizations from making sound decisions. China estimates, for example, its 2003 surplus with the U.S. as $63 billion, while the U.S. has tallied China's surplus (U.S. deficit) at $124 billion. But it's not just the U.S. Similar differences exist for other countries: China reports a $22 billion surplus with the European Union, while EU data reflect $57 billion; Japan, an $11 billion deficit, vs. Japan's calculation that China has a $14 billion surplus with Japan; Canada, a $1 billion deficit, vs. a $10 billion surplus. Simply put, China underestimates its surplus with all partners.

Using their data to compute China's surplus, with appropriate adjustments made for transshipments through Hong Kong and transportation charges, China's global surplus based on trading partner data was estimated at $202 billion in 2003, compared with China's estimate of $25 billion. Do the math. China's numbers simply do not add up. Investment and other decisions that businesses make based on faulty data could spell disaster. Economists underestimate the degree of undervaluation of the yuan, which realistically is of the order of 40% when calculated on the basis of trading partner data.

Multinational companies have struggled through a number of currency crises: the peso crisis in 1994, the Asian financial crisis in 1997-98, and the ruble crisis in 1998. A yuan/dollar crisis would be far more serious than any of these, having a much more dramatic impact on global trade and finance. What is needed is a soft landing. This can be achieved only if the Chinese act swiftly, with the support of the U.S. and the EU.

Robert B. Cassidy, Director

International Trade & Services

Collier Shannon Scott PLC

Washington

Editor's note: Previously, the writer was Assistant U.S. Trade Representative for China, Hong Kong, and Taiwan.

The argument for free trade was classic bait and switch ("States' rights vs. free trade," Government, Mar. 7). The initial agreement was eminently logical. Nations would remove all "artificial barriers" to trade. "Artificial barriers" were easily understood to mean tariffs and subsidies. Now the word "artificial" is gone, and our basic values are under attack as "barriers" to free trade.

This means "free trade" nations must regress to the lowest common denominator of values. It is time to rethink this deal.

David L. Hagan

Pismo Beach, Calif.

In "Mad cow's stubborn mystery" (Science & Technology, Mar. 7) BusinessWeek writes that even some within the National Cattlemen's Beef Assn. agree that further research is "urgently needed." This is followed by a quote from me that says: "We should follow the science." BusinessWeek used my statement incorrectly. I was referring to a significant body of research that shows beef is safe from "mad cow."

Gary Weber

Executive Director, Regulatory Affairs

National Cattlemen's Beef Assn.

Centennial, Colo.

"Mad cow's stubborn mystery" mentions the U.S. Agriculture Dept.'s commitments to "meatpackers and ranchers who want access to Canadian cattle." Nothing could be further from the truth. The Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America (RCALF-USA), with more than 10,000 members, of which I am one, has been fighting to keep the border closed to protect the American public from possible contaminated beef from Canada since the Agriculture Dept. proposed reopening the border.

On Mar. 2, RCALF-USA gained a temporary restraining order preventing the border from opening until a full hearing could be held. Not all cattle ranchers want to gain access to Canadian cattle. Some of us want to protect ourselves and the U.S. consumer from problems from over the border until all pertinent issues have been discussed.

Kirby Walborn

Hardin, Mont.

No matter how many reforms European countries may introduce to become more competitive in the fast-growing global economy, they would still lag behind and continue to face lackluster growth unless they become more open to accepting highly skilled immigrant workers and students from India, China, and other Asian countries ("Every little reform counts," International Business, Mar. 7). That would not only require reforms in their economic and immigration policies, but far more profound changes in the perceptions of Europeans toward foreigners.

Srinivas Balla

Fairfax, Va.


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