China's foreign exchange policies are stealing markets from the U.S., killing jobs here and hampering growth rates, said Peter Navarro, a business professor at the University of California, Irvine, and producer of the documentary "Death By China."

China has long been criticized for keeping its currency, the yuan, artificially low to give it unfair advantage over other countries in global trade arenas, especially the U.S.

Such policies are killing labor markets in the U.S., and Washington must toughen its stance against the Asian giant if it wants to see growth rates return to levels not seen since 2001, when China joined the World Trade Organization.

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Fiscal health suffers from a cheap Chinese currency as well.

"The budget deficit is basically the product of the trade deficit. The reason is simply this: If you do the math the equation is pretty simple. If you run a trade deficit, that basically subtracts from the growth rate," Navarro told Newsmax.TV in an exclusive interview.

"What we have seen, and these statistics are startling, but what we have seen is, prior to 2001 for five-and-a-half decades, our GDP grew at a rate of 3.5 percent. Since China joined the World Trade Organization and entered our markets, that growth rate has fallen to 1.6 percent."

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

Slower growth means the U.S. is missing out on creating 2 million jobs a year due to slower growth rates and offshoring industries — 20 million jobs over a decade.

"Now here's the kicker: if we had those jobs and that growth, we wouldn't have a budget deficit. When Bill Clinton left office, he left with a surplus and we had a decade basically of 3.5–4 percent growth," Navarro points out.

"The budget deficit is largely a product of our slow growth over this decade and our slow growth is largely a product of China's stealing our market."

A solid economy has a solid manufacturing base, as service sectors tend to sprout up surrounding factories and other industrial producers.

Cheaper labor may have sent many jobs abroad that aren't coming back, but not as many as people think.

"It's an interest argument but it generally applies to things like t-shirts or maybe cheap toys or things like that," Navarro said.

"People have to understand two things, one is that what I am concerned about is the higher value-added jobs, the automobiles, the aircraft, the sophisticated medical equipment and we are losing those jobs to China as well."

Other industrial countries rely more on their manufacturing sectors than the U.S., especially Germany

"Germany has 25 percent of their women and men in manufacturing. We're down to 9 percent and the number keeps going lower," Navarro said

The U.S. could see that number rise if it revamped its policies with China

"If we level the playing field with China, we will be able to re-shore a lot of our factories back here, we can compete against their cheap labor with higher productivity. We can't compete against their unfair trade practices, because they are dumping products into America often at or below cost," Navarro said.

"We need a trade policy with China. We don't have one right now."

GOP presidential hopeful Mitt Romney has said he will brand China as a currency manipulator if we wins November's presidential elections, which may opens the door to two possibilities, Navarro said.

"One is that the Chinese retaliate and start dumping all the bonds they hold and try to destabilize our markets and try to bully us," Navarro said.

"The other is, and I think this is the more likely scenario, is they will finally see a White House and Congress that stand up to them, and they'll respect that and they will come to an agreement to fairly value their currency, say over a two-year period."

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.