Join our investing community

Senate Passes Yaun Bill.

Discussion in 'The Economy' started by Johny_come_lately, 12th Oct, 2011.

  1. Johny_come_lately

    Johny_come_lately Well-Known Member

    Joined:
    1st Jul, 2009
    Posts:
    703
    Location:
    SE Queensland
    (Reuters) - The Senate approved a controversial bill aimed at forcing China to raise the value of the yuan in an effort to save American jobs, sending it to the House of Representatives where its fate is uncertain.

    Beijing has warned the legislation could spark a trade war but the bill has advanced further than similar ones in the past, reflecting widespread frustration with China's trade policies and how U.S. lawmakers have seized on voter anxiety about high unemployment ahead of elections in 2012.

    The vote on Tuesday "has put the Chinese on notice: 'Stop your cheating that is costing our country jobs, or you will face the consequences,'" said Democratic Senator Charles Schumer, one of the bill's co-sponsors.

    China was quick to respond. The Foreign Ministry said the bill was a protectionist step and warned that its passage could disrupt joint efforts by the world's two biggest economies to prop up the global recovery. It urged the Obama administration to oppose the legislation.

    China's central bank said the yuan is not the primary cause of China's trade surplus with the United States that Washington puts are more than $250 billion.

    The People's Bank of China added that any gains in the yuan would not improve the American jobs market, where the unemployment rate remains stubbornly above 9 percent, or help the United States tackle its trade deficit.

    Many U.S. economists say China holds down the value of its yuan to give its exporters an edge in global markets. China says it is committed to gradual currency reform and points to a 30 percent rise in the yuan against the dollar since 2005.

    The bill would allow the U.S. government to slap duties on products from countries found to be subsidizing their exports by undervaluing their currencies.

    The yuan fell against the dollar in early trade on Wednesday, as investors worried a Sino-U.S. trade dispute could cause a Chinese retaliation to stop the yuan's steady appreciation.
     
  2. Johny_come_lately

    Johny_come_lately Well-Known Member

    Joined:
    1st Jul, 2009
    Posts:
    703
    Location:
    SE Queensland
    BEIJING, Oct. 13 (Xinhuanet) -- Arguing that the RMB yuan's exchange rate is not the cause of China- U.S. trade imbalance, China expressed its strong oppositions hours after the U.S. Senate passed a controversial bill that would slap tariffs on Chinese goods for the so-called "currency manipulation", warning the U.S. politicians against politicizing the issue of China's currency and resorting to trade protectionism.

    In a written statement posted on its website, China's Foreign Ministry urged rejection of the bill.

    "This proposed bill in the name of so-called 'exchange rate misalignment' is protectionism and a serious violation of World Trade Organization rules," Ma Zhaoxu, a Foreign Ministry spokesperson, said in the statement. "This won't solve America's own economic and employment problems."

    China's Vice Foreign Minister Cui Tiankai on Monday warned that the bill could trigger a trade war and hold back global economic recovery, and it might have an adverse impact on the development of the relations between the two countries.

    "Should the proposed legislation become law, the only result would be a trade war between China and the US and that would be a lose-lose situation for both sides," Cui said.

    China's Ministry of Commerce on Wednesday also voiced its adamant opposition to the bill. The move has seriously violated international regulations and sent a wrong signal of escalating trade protectionism, said Shen Danyang, spokesperson for the ministry.

    Meanwhile, China's central bank issued a statement the same day defending the value of the country's currency.

    "The American Senate has repeatedly ignored the facts, has constantly pestered China on the renminbi exchange issue in order to find an external excuse for its own malaise," the statement said.

    The legislation, now largely targeted at China, would penalize any country "found to be holding the value of its currency down to create an unfair trade advantage".

    Since China adopted a "managed float" of renminbi in 2005, the currency has appreciated in real terms by over 20 percent against the U.S. dollar.

    Still, not a few politicians and economists in the U.S. say China is guilty of "currency manipulation" and say the RMB remains artificially undervalued.

    The bill still needs to pass the House, where it faces stiff opposition from some Republican leaders wary of a trade war and harm to U.S. business interests in China. And the Obama administration has yet to demonstrate support of the legislation either. In the disguise of reducing trade imbalance between the two countries and creating more jobs at home, the U.S. government might find it a handy way to shift its own troubles upon others by designating China as a "currency manipulator".

    But, if the U.S. stopped short of contemplating the issue and taking an objective and far-sighted view on the yuan exchange before making further decisions, especially at this critical juncture, the miscalculation would not only impair the U.S. interests but also disrupt the world's joint efforts to reboot the global economy and bode ill for the prospect of the economic recovery worldwide.


    Editor: Chen Zhi