Greenspan: Don't bar China

[notiCIas]

Greenspan: Don't bar China

Trade moves aimed at limiting China imports would end up hurting US job hunters, says Fed head.

June 23, 2005: 10:15 AM EDT

NEW YORK (CNN/Money) - Federal Reserve Chairman Alan Greenspan warned law makers Thursday that moves to limit China's involvement in the U.S. economy could end up backfiring.

"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 of millions of American consumers," Greenspan said in his prepared remarks. "Policy should aim to bolster the well-being of job losers through retraining and unemployment insurance, not to stave off job loss through counterproductive efforts to impede the process of income-enhancing international trade and globalization."

Greenspan was testifying before the Senate Finance Committee.

At the same hearing, Treasury Secretary John Snow said in his prepared testimony that he believes China is prepared to introduce some flexibility to its currency now, paving the way to an eventual shift to a full float system.

China currently pegs its currency, the yuan, to the dollar. That connection distorts the costs of Chinese imports, making them artificially low and prompting criticism from U.S. competitors.