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US Senate passes bill to pressure China on yuan US Senate passes bill to pressure China on yuan
(40 minutes later)
The US Senate has voted through a bill which aims to punish China for keeping its currency artificially undervalued.The US Senate has voted through a bill which aims to punish China for keeping its currency artificially undervalued.
Some lawmakers argue that the value of the Chinese yuan gives goods from the country an unfair advantage and destroys American jobs. Some lawmakers argue that the value of the Chinese yuan gives goods from the country an unfair advantage and costs American jobs.
The legislation passed the Democrat-led Senate 63-35. The legislation passed the Democrat-led Senate 63-35, putting it through to the House of Representatives.
This puts it into the hands of the House of Representatives, where Republican leaders have called the bill "dangerous". China's foreign ministry reacted by opposing the bill, saying it "obstructs China-US economic relations and trade".
Lawmakers said the vote was a signal that it is time to confront China over its trade policies. Imposing tariffs
US Lawmakers said the vote was a signal that it is time to confront China over its trade policies.
"There are always people who don't want to stand up to China and I think they are, frankly, undercutting our ability to stop the haemorrhaging in our manufacturing jobs," said Democrat Ohio Senator Sherrod Brown."There are always people who don't want to stand up to China and I think they are, frankly, undercutting our ability to stop the haemorrhaging in our manufacturing jobs," said Democrat Ohio Senator Sherrod Brown.
The bill is designed to put pressure on countries the US says are keeping their currencies deliberately undervalued.
If passed into law, it would allow Washington to impose so-called "countervailing duty" tariffs on imports that it sees as unfairly state-subsidised.
Most analysts say the Chinese yuan is undervalued against the US dollar by 25%-30%, with some US lawmakers putting the difference up to 40%.
There has been some appreciation of the yuan in the past year, but not enough to appease critics.
Damaging relations?
Recent comments in the Chinese media have shown fierce opposition to the bill, saying the trade imbalance between the two countries is a result of US economic policies and not the exchange rate.
Many in China, and in the US, worry that action against China would damage US-China relations.
House Speaker John Boehner has said it would be "dangerous" for Congress to get involved with a foreign country's exchange rate.
This sentiment puts the fate of the bill in question.
Secretary of State Hillary Clinton said to Reuters news agency: "I don't know whether this bill in the form that its passing the Senate will ever end up as a piece of legislation coming from the Congress".
"But it does reflect a great deal of frustration on the part of the American people."