China opposes Senate bill on Yuan

Oct. 3, 2011 at 11:37 PM   |   0 comments

BEIJING, Oct. 3 (UPI) -- China Tuesday repeated its opposition to a U.S. Senate bill to allow debate on the undervalued yuan, a condition seen as giving China an unfair trade advantage.

Chinese Foreign Ministry spokesman Ma Zhaoxu, reacting to a Senate vote to proceed to debate on the bill, said such action on the so-called currency manipulation issue "seriously violates rules of the World Trade Organization and obstructs China-U.S. trade ties," the official Xinhua news agency reported.

China has already urged U.S. politicians to avoid ramping up trade protectionism and not to politicize the exchange rate issue, Xinhua said.

China has been under international pressure to allow its currency to appreciate faster. Major trading countries have said an undervalued yuan in relation to major currencies gives China an unfair trade advantage by making its exports less expensive and allows it to run up huge trade surpluses.

The latest action by the U.S. Senate would allow a weeklong debate on the bill, designed to reduce bilateral trade imbalance and to create more jobs in the United States. If passed, the bill would let the U.S. Treasury Department to designate China as a currency manipulator, and could lead to retaliatory tariffs on Chinese goods.

While the yuan has appreciated 25 percent against the U.S. dollar since 2005, China has insisted there has been no corresponding impact on the U.S. jobless rate, which has risen to more than 9 percent.

Beijing sees the effort to label it as a currency manipulator as an excuse for some in Washington to launch a protectionist war.

"China illegally subsidizes their industries," said U.S. Sen. Charles Schumer, D-N.Y., one of the sponsors of the Currency Exchange Rate Oversight Reform Act, the Voice of America reported. "They underpay their workers. They skirt environmental regulations, and ignore the tenets of global trade rule after trade rule after trade rule. They get away with economic murder."

The Senator was quoted as saying China's currency practices have cost the United States more than 2 million jobs in the last decade.

Sen. Jeff Sessions, R-Ala., another sponsor of the bill, said, "During these tough economic times, we ought not to allow any of our trading partners to rig the game in their favor."

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