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US Senators in China to Push for Further Currency Reforms

A group of U.S. senators is in Beijing in a bid to get China to further liberalize its currency, a move the lawmakers believe may help protect American jobs.

Republican Senator Lindsay Graham and Democrat Charles Schumer are co-authors of a bill that threatens to slap 27.5 percent tariffs on Chinese products unless Beijing revalues its currency, the yuan.

Speaking to reporters Tuesday ahead of their meetings with Chinese officials this week, Schumer said he and his colleagues "are not here to dictate specific markers" to the Chinese on how they should conduct currency policy.

"We'd like to walk away from here with the feeling that there will be progress. That's our goal," he said. "We're not to dictate how that progress occurs. We don't believe that's our job or our right, but we've been stymied and worried that we haven't seen much progress thus far."

Last July, China ended the yuan's decade-long peg to the U.S. dollar, and instead pegged it to a basket of currencies. The move has allowed the yuan to strengthen about three percent against the dollar.

However, labor unions and some politicians in the United States call the move insufficient and believe Beijing should allow further liberalization. They say controls on the yuan make Chinese products artificially cheap and threaten U.S. jobs.

China has not allowed the yuan to float freely because of concerns that doing so might destabilize the financial system. Premier Wen Jiabao last week said there would be gradual movement in the exchange rate, but ruled out any further large adjustments.

Graham suggests Beijing is using the wrong recipe for stability.

"If you want instability, you have one group doing it this way, and another group doing it that way," he said. "So my goal is to sell the idea that stability is best achieved when all the countries play by the same rules and we're willing to give whatever time it takes to get the rule of law in place, to come up with a free-floating currency."

A third senator accompanying Graham and Schumer is Republican Tom Coburn, who said the market should decide the value of the Chinese currency. He, like Schumer and Graham, said he wants to use this time in China to learn more about Beijing's position and see how the two sides can work together to reach common ground.

On March 31, lawmakers in Washington are expected to vote on the legislation to impose tariffs on Chinese imports to the United States.