China says an effort by U.S. lawmakers that would punish it and other countries for undervaluing their currencies violates international trade rules. The U.S. House of Representatives passed legislation Wednesday that authorizes tariffs on products from countries with an artificially weak currency. Chinese Commerce Ministry spokesman Yao Jin issued a statement Thursday saying the measure is “inconsistent with relevant rules” of the World Trade Organization. Yao said the bill would lead the U.S. to adopt protectionist trade measures.
U.S. lawmakers and businesses accuse Beijing of keeping the yuan artificially low, giving Chinese-made goods a price advantage on world markets. They say manipulation of the yuan has cost the United States millions of manufacturing jobs. The American Chamber of Commerce in China joined Beijing in opposing the bill. The group issued a statement saying the bill would “fail to create significant U.S. job growth,” and may even cost jobs related to U.S. exports.
Hours before Wednesday’s vote, China’s central bank pledged to increase the flexibility of the yuan. Beijing said last July that it would allow the yuan to trade more freely against some other currencies, but its value has increased just slightly since then.
The U.S. Senate may take up a similar bill in November. If such a measure is approved by the Senate, it would go to President Barack Obama for his signature. Mr. Obama said Wednesday his administration is “pushing” China on the issue. He said the undervalued yuan has contributed to Washington’s $145 billion trade deficit during the first seven months of this year. Republican members of Congress, while agreeing the Chinese currency is undervalued, expressed concern that the bill does not cover other issues with China, including intellectual property rights. They also argued the bill is punishing American consumers.
Mr. Obama discussed the currency issue with Chinese Premier Wen Jiabao on the sidelines of the United Nations General Assembly last week. Mr. Wen said there would be “major turbulence” in China if there were a substantial increase in the yuan. Mr. Wen blamed the huge U.S. trade deficit on the “structure of Sino-U.S. investment and trade,” not the value of China’s currency – Voanews