China Feels the Pressure Over Currency Issues

Workers at Beijing's Rontex factory help American businessmen look their best, stitching men's suits for labels like Calvin Klein and Ralph Lauren.

Rontex's own bottom line, however, is coming apart at the seams. The rising value of China's currency against the U.S. dollar means this company's prices are also going up, making it less competitive globally.

CBS News Correspondent Celia Hatton reports that as China seeks to rebalance the yuan against the dollar and other global currencies amidst rising international pressure, its manufacturing industry is starting to suffer.

"Every percent the yuan rises equals a one percent loss in my profit," Han Shenjun, Rontex's president, said through an interpreter. "If we make a seven yuan profit it rises 7 percent, profit disappears.

Experts contend that China's currency is still undervalued by around 20 percent, keeping anything stamped "Made in China" artificially cheap. China controls the money that enters its borders and does not allow its currence tow trade on gloal markets, limiting its fluxions against the U.S. Dollar.

Over the past few decades, the strategy's fueled China's export-centric economic boom -- a dependency that backfired when the global recession hit. Americans slowed their spending on Chinese goods, forcing hundreds of factories to close.

Since then, Chinese authorities have worked to rebalance their economy. The yuan's value rose roughly 20 percent between 2005 and 2008, but only three percent since then.

Beijing's leaders are walking a fine line: allow the currency to appreciate too slowly and risk rising domestic inflation and international anger. If the yuan rises too fast, factories might lose their wafer-thin profits, throwing millions out of work and ultimately risking China's social stability.

China's government insists it will allow its currency to slowly appreciate over time. That's not fast enough to satisfy those in the United States who say they need a level playing field now.