"Since China entered the World Trade Organization in 2001, the extraordinary growth of trade between China and the United States has had a dramatic effect on U.S. workers and the domestic economy, though in neither case has this effect been beneficial. The United States is piling up foreign debt and losing export capacity, and the growing trade deficit with China has been a prime contributor to the crisis in U.S. manufacturing employment. Between 2001 and 2011, the trade deficit with China eliminated or displaced more than 2.7 million U.S. jobs, over 2.1 million of which (76.9 percent) were in manufacturing. These lost manufacturing jobs account for more than half of all U.S. manufacturing jobs lost or displaced between 2001 and 2011."

The paper notes several recent proposals aimed at reducing China's currency manipulation:

Tax China's assets:

Gagnon, Joseph E. 2012. Combating Widespread Currency Manipulation. Policy Brief #PB12-19. Peterson Institute for International Economics. http://iie.com/publications/interstitial.cfm?ResearchID=2166

Gagnon, Joseph E., and Gary Clyde Hufbauer. 2011. “Taxing China’s Assets: How to Increase U.S. Employment Without Launching a Trade War.” Foreign Affairs, April 25. http://iie.com/publications/opeds/oped.cfm?ResearchID=1818

Require reciprocity in currency purchases:

Gros, Daniel. 2010. “How to Avoid a Trade War: A Reciprocity Requirement.” VoxEU.org, October 8. http://www.voxeu.org/article/how-avoid-trade-war-reciprocity-requirement