Warnings Over Currency Bill

China sees US legislation as protectionist.
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Beijing on Wednesday hit out at the passage of a bill in the U.S. Senate that aims to punish China over its alleged currency manipulation, saying it will benefit no one and could spark a trade war.

"To put it simply, this is a lose-lose situation," foreign ministry spokesman Liu Weimin told reporters in Beijing. "This will do untold harm without a single benefit."

Another foreign ministry spokesman Ma Zhaoxu said the bill, passed in the Democratic-controlled Senate on Tuesday by a 63-35 vote, reflected U.S. trade protectionism and violated rules of the World Trade Organization, the global trade watchdog.

"China calls on the U.S. government, its Congress and various communities to oppose the pressure put on the RMB (yuan) exchange rate by domestic legislation and to tackle trade protectionism," Ma said, according to the Xinhua state news agency.

The bill advocates retaliatory tariffs on Chinese exports if the Chinese yuan currency remains artificially low against the dollar.

Many U.S. lawmakers believe Beijing had kept its currency artificially low for trade gains and that the move has led to a burgeoning trade deficit with China and has cost millions of American jobs.

Meanwhile, China's Ministry of Commerce and central bank warned that the bill would "severely impair Sino-U.S. trade ties and damage the global economy."

Economic feud

The bill is unlikely to be passed by the Republican-controlled House of Representatives.

House Speaker John Boehner said he was "concerned" about China's currency policy but signaled those worries were outweighed by "grave concerns" that the measure could trigger a destructive economic feud between the two economic superpowers.

"Given the volatility in the world markets, given the uncertainty about the world economy, for the Congress of the United States to be taking this step at this moment in time poses a very severe risk of a trade war," he said on Wednesday.

He said that legislation was not the appropriate way to deal with the dispute over the alleged undervaluation of the yuan.

Obama, who has accused China of "gaming" global trade rules, did not take a position on the currency legislation.

On Wednesday, the White House said it was talking to U.S. lawmakers to iron out issues it has with the legislation.

"If this legislation were to advance we would expect those concerns to be addressed," White House Press Secretary Jay Carney said, repeating that China needs to address the yuan undervaluation issue.

The White House has previously said the bill raises "consistency" issues with U.S. obligations under international trade rules.

Currency manipulation

Official Chinese media on Wednesday published a series of articles on the bill, describing it as a means to make it easier to accuse Beijing of currency manipulation.

"The bill comes ahead of the U.S. 2012 elections and at a time when the United States is suffering sluggish growth and persistent high unemployment, which have driven thousands of protesters to the streets of New York and dozens of other cities," Xinhua news agency said.

China's official media has been roundly critical of U.S. media coverage of the Wall Street and other economic protests, accusing it of failing to cover a story on its own turf that it would be sure to report in China.

For nearly a month, protesters have besieged a park in lower Manhattan near Wall Street. The Occupy Wall Street movement, which has spawned similar protests in over 100 U.S. cities, has been highlighting problems such as high unemployment, taxation, corporate greed and distribution of wealth.

Reported by Ho Shan for RFA's Cantonese service. Translated and written in English by Luisetta Mudie.





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