Greenspan, Snow warn against China sanctions |
Imposing punitive trade sanctions against China may slow the drive to persuade Beijing to adopt a more flexible currency and won't protect US jobs, Federal Reserve Chairman Alan Greenspan and Treasury Secretary John Snow warned on Thursday.
Clearly worried that spiraling US deficits were driving Congress toward trade action, Greenspan and Snow sought to tamp down the angry mood by pointing out the possible consequences for the United States.
Both said China should loosen the peg it maintains for its yuan currency against the dollar, in its own interest and that of the global economy, but said it would be futile to try to force Beijing to do so through trade sanctions.
"A policy to dismantle the global trading system, in a misguided effort to protect jobs from competition, would redound to the eventual detriment of all U.S. job-seekers, as well as millions of American consumers," Greenspan said.
Snow has led the Bush administration's drive to get China to ease the peg at which it has held its yuan -- at about 8.28 to the U.S. dollar -- for nearly a decade. He said financial diplomacy was working and that China could and should adopt a more flexible currency, which would have the effect of making its imports more expensive relatively for U.S. consumers.
Trade action was not the way to go, though, he said.
"Action on any of the punitive legislative proposals before Congress now would be counterproductive to our efforts at this time," Snow said.