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China 'firmly opposes' US Senate's yuan bill

Xinhua, October 4, 2011

• China on Tuesday expressed firm opposition to the U.S. Senate's bill on the Chinese yuan, after it voted to allow a debate on the so-called "currency manipulation" bill.

  Such a move "seriously violates rules of the World Trade Organization and obstructs China-U.S. trade ties," Foreign Ministry spokesman Ma Zhaoxu said in a statement.

  China urges certain U.S. Senators to "rationally understand Sino-US trade cooperation, which is mutually beneficial in nature, and stop pressuring China through domestic law-making," he said.

  The bill "will further escalate the exchange rate issue by adopting protectionist measures with an excuse of 'currency imbalance,'" he said.

  "China-U.S. economic and trade cooperation, which has brought concrete interests of Chinese and American peoples, has a protruding feature of mutual benefits and win-win results and thus has become an important foundation and driving force of Sino-US ties," Ma said.

  Statistics indicate that China and the U.S. are each's second largest trading partners, and China is the fastest-growing export market.

  "It is widely understood that the exchange rate of the renminbi, the Chinese currency, is not the cause of the Sino-U.S. trade imbalance," Ma pointed out.

  The yuan has appreciated 7 percent against the U.S. dollar since June 2010, when the central bank announced further yuan exchange rate formation mechanisms. China will continue to institute a managed floating exchange rate system.

  China calls on the United States to abandon protectionism or politicizing economic issues so as to create favorable environment for the growth of bilateral economic and trade ties, he said.

  The U.S. Senate voted Monday (local time) to allow a debate on the bill that addresses so-called "currency manipulation" by China amid strong opposition from China and U.S. business groups.

  The 79-19 vote opened a week-long debate on the bill, the last procedure before it is to be finally voted on the Senate floor. And for the bill to become law, it would still have to clear the House of Representatives and then be signed by President Barack Obama.

  The Currency Exchange Rate Oversight Reform Act of 2011 is sponsored by Senators Charles Schumer, Sherrod Brown and other Democrat and Republican lawmakers.

  Some U.S. senators have violated internationally accepted regulations by allowing a debate that seeks duties on Chinese imports, said Shen Danyang, a spokesman for the Ministry of Commerce, on Tuesday.

  The spokesman said the yuan exchange rate was not to blame for China-U.S. trade imbalance. It is unfair to use a controversial bill on so-called "currency manipulation" by China to transfer the U.S. internal contradictions.

  China has been striving to achieve a trade balance in recent years. In the first half of 2011, the proportion of trade surplus in the country's gross domestic product had dropped to 1.4 percent, which was within the internationally recognized rational range, he said.

  Shen pointed out that the U.S. limit of high-tech product exports to China was a major reason of the imbalance, adding that the global economy is in a sensitive period and needs a stable international monetary environment.

  The People's Bank of China, the country's central bank, on Tuesday expressed its "deep regret" about the U.S. Senate's currency bill that pushes China to let the yuan appreciate further.

  The central bank said the bill may seriously affect China's currency reform and could result in a trade war between the two economies.

  There are a variety of reasons for the global trade imbalance. The differences in investment and trade structures, savings and consumer behavior, roles on the global industrial chain and the unreasonable international monetary system may be more important reasons for the trade imbalance between China and the United States, it said in a statement posted on its website.

  The bill will not help resolve U.S. domestic problems such as insufficient savings, a high trade deficit and high unemployment rate, the statement said.

  The U.S. Senate took up China's currency issue at a time when U.S. unemployment is hovering above 9 percent, and both Republican and Democratic parties are gearing up for next year's presidential election, which is expected to be dominated by unemployment and economic issues.

  Critics argue that figures from the past 20 years show no link between China's exchange rate and the U.S. unemployment rate. Although the yuan has appreciated against the dollar by over 25 percent since 2005, the U.S. unemployment rate has nevertheless risen from about 7 percent to over 9 percent.

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