AFL-CIO Wants Feds to Challenge China on Currency

America's largest labor federation is urging the U.S. government to challenge more strongly what it calls China's unfair manipulation of its exchange rate to gain trade advantages over U.S. business.

Richard Trumka (search), secretary-treasurer of the AFL-CIO, said Thursday that American manufacturing workers are suffering because of China's illegal subsidies to businesses, manipulation of its currency and violation of its workers' rights.

"The resulting cost to our economy in lost jobs and opportunities is staggering," Trumka said.

Yet, he added, "in the face of the Chinese government's empty promises and inadequate actions, our own government has simply failed to act."

Officials with the Treasury Department did not respond to requests for comment.

Among the AFL-CIO's demands, Trumka said, are that a coming Treasury Department report accurately reflect what the labor group calls China's exchange rate manipulation and that the Commerce Department aggressively pursue unfair trade complaints.

In July, China revalued the yuan by 2.1 percent and scrapped its decade-old peg to the U.S. dollar. Instead it let the currency trade in a tightly restricted float against a basket of currencies of its major trading partners.

American manufacturers contend the yuan now is undervalued by as much as 40 percent, which would make Chinese goods cheaper in the United States and American products more expensive in China. U.S. manufacturers argue this is the principle reason for the huge trade gap between the two nations, which surged to $162 billion last year, a record U.S. trade gap with any country.

A spokesman for the Chinese embassy in Washington, Chu Maoming (search), said Thursday that China doesn't want trade issues with the United States to be politicized.

"It is natural to have some surplus or deficit because the volume of trade (between the United States and China) is so big," Chu said. "Business is business. When you do business, you might make profit, you might lose, but the Chinese government's policy is not seeking a trade surplus over the United States."

China, he said, has been working hard to reform its currency, but officials must also consider the influence such reform has on domestic and world economies, including the United States'. "China has done a lot on that, and it is still pushing forward the reform," he said.

Trumka called China's currency revaluation a smoke screen. "Since the revaluation, the Chinese currency has not in fact floated, and the People's Bank of China has made clear that it intends to keep it that way," he said.

Treasury Secretary John Snow's visit to China this week is expected to focus on China's currency policies and its trade surplus with the United States.

Trumka said he expects the visit to be "more rhetoric from both governments, with little action. The time for talk is over. It is time to look out for American workers and the U.S. economy."

Many in the Congress also have demanded more forceful action. One measure with widespread support would impose 27.5 percent tariffs on all Chinese imports unless Beijing should act more vigorously to allow the value of its currency to rise.