Congress Debates Bill To Pressure China On Yuan Value
October 6, 2011
In the latest effort to press China
on the value of its currency, members of the U.S. Senate are considering
legislation that would place additional taxes on Chinese products. The bill,
titled the Currency Exchange Rate Oversight Reform Act of 2011, faces
significant challenges, though, before it could pass both houses of Congress.
"I think it's pretty dangerous to be moving legislation through the United
States Congress forcing someone to deal with the value of their currency,"
said House Majority Leader John Boehner (R-OH). "While I've got concerns
about how the Chinese have dealt with their currency, I'm not sure this is the
way to fix it."
lawmakers have been threatening to punish Chinese exports with tariffs since
2005, but no legislative action has been taken. Despite recent appreciation of
the yuan – which has risen more than 6% against the
dollar since June of 2010 – economists widely agree China still undervalues its
currency by as much as 30%. "For some inexplicable reason, the Republican
leadership in the House is siding with the Chinese government," said
Senator Chuck Schumer (D-NY). "This is not the time to go soft on Beijing."
For its part, China
has quickly and sharply criticized the Exchange Rate Act, threatening a trade
war with the U.S.
if the bill becomes law. "By using the excuse of a so-called currency
imbalance, this will escalate the exchange rate issue, adopting a protectionist
measure that gravely violates WTO rules and seriously upsets Sino-U.S. trade
and economic relations," said Ma Zhaoxu, a
Chinese foreign ministry spokesperson. "China
expresses its adamant opposition to this."
Supporters of the Exchange Rate Act say the measure has 225
co-sponsors in the U.S. House, including 61 Republicans. The bill could be
voted on in the Democratic-led Senate this week, although Senate Republican
leader Mitch McConnell said the current measure is "highly unlikely"