The US Senate will try to pass legislation in coming weeks aimed at forcing China to stop holding its currency below market value, according to Reuters.com.
The news agency quoted Senate Democratic Leader Harry Reid saying: “One of the things we’re going to do is Chinese currency, which is a jobs bill.”
Many U.S. lawmakers and economists say China deliberately undervalues its currency, the yuan, against the dollar to give its companies an unfair price advantage in international trade. China rejects this criticism.
US lawmakers have been threatening legislation since 2005 to punish Chinese exports with tariffs designed to offset the effect of China’s stockpiling of US dollars to hold down the value of the yuan, also called the renminbi.
The closest any currency legislation has come to passage was last year, when the Democratic-controlled House of Representatives passed a bill, but the Senate took no action.
With Republicans now controlling the House and signaling they want to focus on other China trade issues, it is not clear Reid’s bid will succeed.
The yuan, which traded at around 6.4 per dollar on Tuesday, has risen about 3% so far this year and 6.7% since its depegging by the Chinese government in June 2010.
Reid said he would bring up the bill after the Senate votes on disaster aid, highway funding and legislation related to trade agreements. He said the Senate would produce a stand-alone bill with the support of opposition Republicans.
Analysts previously thought lawmakers might attach currency legislation to a trade bill as part of the process of passing US free trade pacts with Colombia, Panama and South Korea.
Last year, the House passed a bill treating “undervalued currencies” as an export subsidy. It died in the Senate but would have allowed US companies to seek countervailing duties on a case-by-case basis against imports that benefit from China’s currency practices.
Republican leaders who now control the House have shown little enthusiasm for China currency legislation.
More at Reuters