China on Proposed Currency Bill: Back Off

U.S. lawmakers charge that China keeps the yuan unfairly cheap against the dollar, giving its goods as much as a 30% edge over comparable U.S. products.

China on Sunday urged Washington to stop pressuring Beijing as the U.S. Senate prepares to vote on a controversial bill aimed at punishing the Asian nation for alleged currency manipulation.

The proposal, powered by a tide of U.S. voter anger at the sour economy and high unemployment ahead of the November 2012 elections, calls for retaliatory duties on Chinese exports if the yuan's value is unfairly "misaligned."

In a statement, China's Foreign Ministry reiterated its "firm opposition" to the bill.

"China ... urges the United States to abandon protectionism and stop putting pressure on China using domestic legislation," it said.

The U.S. Senate has defied White House complaints and stiff opposition from China and big business to press ahead with the legislation, and is expected to vote on the bill this week.

Lawmakers of both parties charge that China keeps the yuan unfairly cheap against the dollar, giving its goods as much as a 30% edge over comparable U.S. products.

But Beijing, which has let the yuan rise against the dollar as it faces stubbornly high inflation at home, has fired back at criticism of its currency policy.

Even if it passes in the Senate, the bill still faces an uncertain future in the House of Representatives, where Republican House Speaker John Boehner has signaled the legislation will die.

"It's dangerous. You could start a trade war. And a trade war, given the economic uncertainty here and all around the world -- it's just very dangerous, and we should not be engaged in this," Boehner said.

President Obama has expressed concern the bill could violate World Trade Organization rules. But he still delivered an unsparing assault on China's policies on Thursday.

"China has been very aggressive in gaming the trading system to its advantage and to the disadvantage of other countries, particularly the United States," he said, accusing Beijing of keeping its yuan weak against the dollar.

"And that makes their exports cheaper, and that makes our exports to them more expensive. So we've seen some improvement, some slight appreciation over the last year. But it's not enough."

China's Foreign Ministry did not directly respond to Obama's comments, saying instead that China has always cooperated with other countries in "joint development."

Copyright Agence France-Presse, 2011

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