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China Warns US Yuan Bill Could Damage Ties


China Thursday expressed its anger at legislation in the United States aimed at punishing Beijing for not letting its currency rise in value and failing to address trade imbalances.

Foreign Ministry spokeswoman Jiang Yu says the United States should avoid steps that could damage relations. She says her government opposes what she says is Congress using the currency issue to launch protectionist measures against China.

On Wednesday, the U.S. House of Representatives passed legislation that would allow Washington to treat what the bill describes as fundamentally undervalued currencies as an illegal export subsidy.

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Jiang says the bill would harm commercial relations between China and the U.S., and says it could affect the economies of both countries, and the world.

The bill is primarily aimed at China. The U.S. and other countries say it keeps its currency, the yuan, artificially low to give its exports an unfair advantage. Many U.S. politicians, businesses and labor groups say this has contributed to the United States' massive trade deficit with China. Congress says the deficit causes jobs losses in the U.S.

The bill would allow the U.S. to set tariffs to offset China's price advantages.

It must be passed by the Senate and signed by President Barack Obama to become law, and neither is certain. But the latest move has rattled China.

State media quoted the Commerce Ministry as saying the bill contravenes World Trade Organization rules.

Jiang, the Foreign Ministry spokeswoman, would not say if Beijing will seek to retaliate.

But Beijing is not alone in its opposition to the bill.

The American Chamber of Commerce in China on Thursday said the bill would not achieve its objectives and would not create significant U.S. job growth.

Chairman John Watkins Jr. says the group opposes the bill because it will make the trade deficit worse, and will likely shift some China production to other low-cost countries.

"We believe that it will actually reduce exports and thereby good jobs," Watkins says. "I think it will add further tension to the U.S.-China relationship. We think that Congress would be better focused and better advised coming up with a response to deal with China's web of indigenous innovation policies, weak intellectual property protection, and tightening market access for foreign firms here."

Any vote on the bill in the U.S. Senate will not come until after congressional elections on November 2.

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