H. Res. 414
In the House of Representatives, U.S.,
October 29, 2003.
Whereas United States investors and exporters to the Peo-
ple’s Republic of China recognize the opportunity of
doing business with China but have raised serious con-
cerns that many of the commitments China made upon
joining the World Trade Organization have not yet been
implemented or implementation has been inadequate;
Whereas market barriers and unfair trade practices continue
to exist, including high tariffs, subsidies, technical trade
restrictions, counterfeiting, tied trade, violations of intel-
lectual property rights, and nonmarket-based industrial
policies that limit United States exports;
Whereas increases in global trade will lead to faster growth
of the United States economy and an improved quality of
life for workers in the People’s Republic of China;
Whereas China is one of the fastest-growing economies in the
world and an important expanding market for United
States exports;
Whereas China has made progress in implementing the com-
mitments that it made upon joining the World Trade Or-
ganization, including the required reduction of its tariffs
on many industrial goods of importance to United States
manufacturers;
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Whereas China must move more quickly to implement its
World Trade Organization commitments fully and to re-
move many market access barriers;
Whereas the currency of the People’s Republic of China, the
renminbi, has been fixed relative to the United States
dollar since 1994;
Whereas a systemically misvalued currency by any large
country can have damaging trade-distorting effects on
both that country and its trading partners by decreasing
the price of exports of products of that country and in-
creasing the price of imports to that country;
Whereas China’s trade liberalization will cause economic im-
balances in its market and world markets unless China
also implements capital account liberalization;
Whereas the market-based valuation of currencies is a key
component to resilient global trading systems by enabling
smoother transitions to reflect underlying economic fun-
damentals in a country;
Whereas China’s substantial foreign reserves reduce China’s
susceptibility to currency crises and, therefore, the need
for continued use of a fixed currency;
Whereas the International Monetary Fund (IMF) has advised
China to adopt a more flexible exchange rate policy, and
has indicated that such a change would not have serious
adverse consequences for that country, although IMF of-
ficials have expressed concern about the weakness of Chi-
na’s banking system and that it may not have the ability
to move quickly towards a floating rate;
Whereas the Joint Ministerial Statement in September 2003
of the Asia-Pacific Economic Cooperation Finance Min-
isterial Meeting ‘‘emphasized the importance of accel-
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erating structural reform, adopting macroeconomic poli-
cies that promote sustainable growth, supported by ap-
propriate exchange rate policies that facilitate orderly
and balanced external adjustment . . . [and] noted a view
expressed at the meeting that more flexible exchange rate
management, in some cases, would promote this objec-
tive’’;
Whereas the Group of Seven Finance Ministers and Central
Bank Governors in their September 2003 Communique
have emphasized that ‘‘more flexibility in exchange rates
is desirable for major countries or economic areas to pro-
mote smooth and widespread adjustments in the inter-
national financial system, based on market mechanisms’’;
Whereas China’s central bank governor has stated that the
value of the renminbi will eventually be determined by
market forces rather than be fixed to the dollar but has
not given any indication of when this change in policy
will occur;
Whereas China recognizes that it is in its own interest to re-
form its exchange rate regime and its banking system in
order to establish a resilient economy and control its rate
of economic expansion;
Whereas China is taking concrete steps to move to a more
flexible exchange rate regime by increasing private owner-
ship of its banking system and by establishing a technical
working group on a range of financial sector issues, in-
cluding exchange rate policy;
Whereas manufacturing is important to the health of the
United States economy, generating high quality products,
personal opportunity, productive careers, wealth, high
standards of living, and economic growth;
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Whereas the manufacturing sector is the leading source of
new patents and innovation in the United States econ-
omy, which helps drive economic growth at home and
abroad;
Whereas the manufacturing sector faces the most intense
global competition in United States history, making it
difficult for many firms to operate profitably and earn a
sufficient return on capital invested, and manufacturing
costs continue to increase for many reasons, including
governmental actions; and
Whereas the manufacturing sector in the United States seeks
a global level playing field for competition and markets:
Now, therefore, be it
Resolved, That—
(1) the House of Representatives commends the
President and his Administration for continued efforts to
engage the Government of the People’s Republic of
China directly and to encourage China to fulfill its com-
mitments as a member of the World Trade Organization;
(2) the House of Representatives encourages the
People’s Republic of China to meet its commitments to
the trade rules and principles of the international com-
munity of which it is now a member;
(3) the Chinese economy would benefit from an ex-
change rate determined by the market in order to avoid
artificial rates that can lead to market and trade distor-
tions;
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(4) the House of Representatives will continue to
monitor closely and work with the Administration to en-
courage China’s efforts to modernize its financial sys-
tem, establish a more flexible exchange rate, and comply
with its trade agreement obligations;
(5) the House of Representatives urges the Admin-
istration to continue its intensive discussions with offi-
cials from the Government of the People’s Republic of
China to facilitate moves towards a market-based valu-
ation of the renminbi, relaxation of capital controls, and
reform of its banking sector; and
(6) manufacturing is an important sector to the
United States economy and, therefore, the United States
Government should intensify efforts to promote innova-
tion, reduce costs, and level the international playing
field for this sector.
Attest:
Clerk.