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

We've never been very good at being conservative.

And usually, that serves us well in doing the ambitious, hard-hitting journalism that you turn to Mother Jones for. But it also means we can't afford to come up short when it comes to scratching together the funds it takes to keep our team firing on all cylinders, and the truth is, we finished our budgeting cycle on June 30 about $100,000 short of our online goal.

This is no time to come up short. It's time to fight like hell, as our namesake would tell us to do, for a democracy where minority rule cannot impose an extreme agenda, where facts matter, and where accountability has a chance at the polls and in the press. If you value our reporting and you can right now, please help us dig out of the $100,000 hole we're starting our new budgeting cycle in with an always-needed and always-appreciated donation today.

payment methods

We've never been very good at being conservative.

And usually, that serves us well in doing the ambitious, hard-hitting journalism that you turn to Mother Jones for. But it also means we can't afford to come up short when it comes to scratching together the funds it takes to keep our team firing on all cylinders, and the truth is, we finished our budgeting cycle on June 30 about $100,000 short of our online goal.

This is no time to come up short. It's time to fight like hell, as our namesake would tell us to do, for a democracy where minority rule cannot impose an extreme agenda, where facts matter, and where accountability has a chance at the polls and in the press. If you value our reporting and you can right now, please help us dig out of the $100,000 hole we're starting our new budgeting cycle in with an always-needed and always-appreciated donation today.

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