Greenspan Disputes Manufacturers On Chinese Currency And Jobs

ByJohn S. McClenahen For more than a year the Washington, D.C.-based National Association of Manufacturers and other business groups have been charging that an undervalued Chinese currency is costing the U.S. manufacturing jobs. Their prescription: Free the Chinese currency -- variously referred to as the yuan or the renminbi -- and let the market determine its value. Federal Reserve Board Chairman Alan Greenspan doubts that would create U.S. jobs. "The story on trade and jobs, in my judgment, is a bit more complex, especially with respect to China, than this strain of conventional wisdom would leave one to believe," Greenspan told the World Affairs Council of Greater Dallas on Dec. 11. "If the renminbi were to rise, presumably U.S. imports from China would fall as China [lost] competitive position to other low-wage economies. But would, for example, reduced imports of textiles from China induce increased output in American factories?" he asked rhetorically. "Far more likely is that our imports from other low-wage countries would replace Chinese textiles," stated Greenspan. Indeed, going beyond textiles, Greenspan stated, "A rise in the value of the renminbi would be unlikely to have much, if any, effect on aggregate employment in the United States."