The Obama Administration’s View On China’s Exchange Rate

I wrote yesterday, relying on the Hill’s reporting, that the Obama administration opposes the China currency manipulation bill. At yesterday’s press briefing, Jay Carney gave a somewhat different account:

MR. CARNEY: We’re reviewing the bill. (Laughter.) No, seriously, we are reviewing the bill and we share the goal of achieving further appreciation of China’s currency. As you know, and those who — in the financially oriented press know, the — China has moved some in terms of appreciating its currency. I believe it’s appreciated about 10 percent, adjusted for inflation, since June of 2010. But it’s substantially undervalued, and we need to see continued progress, and we’ve made that clear publicly and privately.

Q: But you’re not sure whether you’re going to support this?

MR. CARNEY: We’re reviewing the bill.

Q: And do you have any idea when you might have a conclusion to that review?

MR. CARNEY: Not that I could offer today.

Even more so than most issues, this one cuts across different jurisdictions inside the government. It’s an economic policy issue, but it’s also really a diplomatic issue. The concern among officials who are hesitant to embrace this bill is that things are already moving in the right direction. A big high-profile fight with the Chinese might produce faster action in the right direction, or it might halt that progress. There’s some sentiment that the less said about this in public the better.