President Obama and Treasury Secretary Geithner have taken an extremely modest approach to what may experts believe is manipulative behavior by the Chinese vis-a-vis the value of the yuan. The peaceful method of negotiating  began to fall apart when China’s senior political figures accused the US of keeping the dollar weak to improve its exports. The Administration looked like it might stand by and let the insult pass.  Many members of Congress will not.

One hundred thirty Congressmen sent a letter to the President and the secretaries of Treasury and Commerce. In it they said “We write to express our serious concerns about China’s continued manipulation of its currency.”

The most serious charges in the letter were that “Maintaining its currency at a devalued exchange rate provides a subsidy to Chinese companies and unfairly disadvantages foreign competitors.  U.S. exports to the country cannot compete with the low-priced Chinese equivalents, and domestic American producers are similarly disadvantaged in the face of subsidized Chinese imports. ”

Nearly one-third of Congress is willing to go to an economic and trade war with the Chinese. The letter that went to the Administration calls for duties on some Chinese goods. The communication also suggests that China go on the Treasury list of nations that manipulate their currencies.