China reacts to U.S. Senate vote on yuan

BEIJING, Oct. 4 (UPI) -- China reacted quickly to the U.S. Senate vote that would pave the way for the country to be declared a currency manipulator, saying it was unfair and illegal.

The Chinese Foreign Ministry said the bill, which passed with a 78-19 vote, violates World Trade Organization rules, The Wall Street Journal reported Tuesday.

China's central bank said the bill would do more harm than good, as it would "seriously affect" the country's process of raising the value of its currency, while not providing significant relief to the U.S. economy.

The Ministry of Commerce called the bill "unfair."

UBS economist Wang Tao said, "China won't yield to the pressure from the United States or change its gradual approach to yuan exchange-rate reform."

China has been allowing its currency to appreciate, but at a pace connected to economic goals of its own.

The Obama administration has been putting pressure on China to accelerate the pace of the yuan's appreciation but has stopped short of pushing to label the country a currency manipulator, which opens up the possibility of imposing tariffs on Chinese goods.

In September, the yuan fell 0.1 percent against the dollar, although it has risen 6.9 percent since June. Some economist, however, estimate the yuan is 20 percent to 40 percent undervalued, giving its exports a serious price advantage.

Sen. Charles Schumer, D-N.Y., said, "For years and years and years, Americans have grimaced, shrugged their shoulders, but never done anything effective" to deal with the unfair exchange rate.

"They use the rules of free trade when it benefits them, and spurn the rules of free trade when it benefits them," Schumer said.