Why US Multinationals Love Currency Manipulation Almost As Much As Hu Jintao

Flickr user rebuildingdemocracy

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


During negotiations between Chinese President Hu Jintao and President Barack Obama at the White House today, one of the biggest sticking points will be China’s longstanding manipulation of its currency, which Obama has bluntly called “an irritant.” The artificially cheap Chinese renminbi translates into cheap Chinese exports that have fueled a gaping $250 billion US-China trade deficit and contributed to the loss of some 2 million US jobs. This afternoon, the two presidents were joined by 14 CEOs from US multinationals such as Microsoft, Goldman Sachs, and Coca-Cola. But how much backup will they give Obama on the currency issue?

Maybe not much.  According to the latest annual survey (WSJ sub req’d) by the American Chamber of Commerce in Shanghai, China’s main commercial hub, more than half of US companies working there said that their businesses would be harmed by a 10 percent increase in the Chinese currency’s value. In other words, US companies that have already outsourced production to China—which includes a huge portion of corporate America—now fear that their profit margins will shrink if their Chinese-made “American” products become more expensive in the US. 

So clearly, multinationals shouldn’t be the only interests at the table. Small and midsize US businesses that actually produce all of their products here (“American” companies, in the true sense) should also be heard. 

They’re definitely feeling snubbed. “The Obama administration has made clear, over and over again, that its heart is with the multinationals and that it does not really think America’s domestic manufacturing base matters,” said Ian Fletcher, a research fellow at the US Business and Industry Council, a Washington think tank representing small and midsize manufacturers. “But as long as the U.S. keeps leaking $500 billion a year through the trade deficit, America will continue to struggle to create jobs.” 

Updated at 1/19/11 at 1:36 pm Pacific

Fact:

Mother Jones was founded as a nonprofit in 1976 because we knew corporations and billionaires wouldn't fund the type of hard-hitting journalism we set out to do.

Today, reader support makes up about two-thirds of our budget, allows us to dig deep on stories that matter, and lets us keep our reporting free for everyone. If you value what you get from Mother Jones, please join us with a tax-deductible donation today so we can keep on doing the type of journalism 2024 demands.

payment methods

Fact:

Today, reader support makes up about two-thirds of our budget, allows us to dig deep on stories that matter, and lets us keep our reporting free for everyone. If you value what you get from Mother Jones, please join us with a tax-deductible donation today so we can keep on doing the type of journalism 2024 demands.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate