Federal Reserve Chairman Alan Greenspan warned today that any congressional bid to impose punitive curbs on Chinese imports with the aim of protecting US jobs was doomed to failure.
In prepared testimony for delivery to the Senate Finance Committee, Mr Greenspan said stiffer duties on Chinese imports would simply shift the source of US imports to other low-cost suppliers.
"A policy to dismantle the global trading system, in a misguided effort to protect jobs from competition, would rebound to the eventual detriment of all US job-seekers, as well as millions of American consumers," he said.
Mr Greenspan said the sooner China adopted a more flexible currency, the better it would be for it and for the global economy - a position the Bush administration has advocated for the past two years.
Mr Greenspan was appearing in front of the committee along with Treasury Secretary John Snow, who also said that trying to compel China to adopt a more flexible currency through imposing tariffs on its imports would be counterproductive.