House Speaker John Boehner on October 4 warned against passing "dangerous" legislation to punish China for its alleged currency manipulation, dealing a damaging blow to the bill's prospects.
"It's pretty dangerous to be moving legislation through the United States Congress forcing someone to deal with the value of their currency," Boehner said a day after the measure cleared a procedural hurdle in the U.S. Senate.
"This is well beyond what Congress ought to be doing, and 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," said the speaker.
His comments came as the Senate pressed ahead with the legislation, which envisions imposing retaliatory tariffs on Chinese imports if Beijing's currency is found to be unfairly "misaligned," and was expected to pass it this week.
"We can't ignore blatant, unfair trade practices that put American workers at a disadvantage," said Democratic Senate Majority Leader Harry Reid.
Lawmakers of both major 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 has let the yuan rise against the dollar as it faces high inflation at home, and Chinese Foreign Minister spokesman Ma Zhaoxu said on Oct. 4 that the measure amounted to "protectionism."
"China firmly opposes this," he added. "This bill uses so-called 'currency imbalances' as an excuse, escalates the issue of the exchange rate, implements protectionist measures ... and seriously interferes with Sino-U.S. trade ties."
The bill was expected to clear the Senate this week, but the House of Representatives' Republican leaders have made clear they have no plans to bring it to a vote in that chamber, stalling the bill indefinitely. Republican leadership aides have said, however, that this could change if the issue became a core bone of contention between President Barack Obama and his as-yet undecided Republican challenger in the November 2012 election.
The U.S. business community mostly opposes the measure, citing concerns about embroiling the brittle economy in a trade war and worries about the impact of a rising yuan on prices of commodities or other inputs upon which U.S. firms rely.
Obama spokesman Jay Carney said on Oct. 3 that the White House was still "reviewing" the measure and said there had been "some appreciation" of the yuan, "but not enough," even as it warned against steps that might violate "our international obligations."
China's central bank has expressed "regret" at the bill, which would empower U.S. businesses and in some cases labor unions to trigger a U.S. Commerce Department investigation into alleged currency manipulation. "We think there are many reasons for global imbalances, and the yuan exchange rate is not the main reason for the Sino-U.S. trade imbalance."
"The differences in Chinese and U.S. investment and trade structures, in deposit and consumer rates... and the unreasonable global currency system may be even more important elements than the currency exchange."
The battle over the measure came as a new poll, released on Oct. 3, showed Americans sharply divided by party on whether Beijing is friend or foe. Just 38% of Republican respondents in a CBS News/Vanity Fair survey said China was an "ally," against 52% of Democrats and 42% of independents saying the same with the presidential campaign heating up.
Fifty-five percent of Republicans said Beijing was an "enemy," against 34% of Democrats and 42% of independents, according to the poll, which had an overall error margin of plus or minus three percentage points.
Seven percent of Republicans, 14% of Democrats and 16% of independents said they were unsure in which category to put China, which is widely blamed for U.S. jobs losses, especially in the manufacturing sector.
Copyright Agence France-Presse, 2011