The US upper chamber passes a bill against currency manipulation to stop the wave of low cost Chinese goods flooding the US market. The bill is not expected to get through the lower house. Xinhua warns the move might trigger a trade war. Meanwhile, Chinese exports decline.
Washington (AsiaNews/Agencies) – The US Senate passed a bill aimed at punishing China for keeping the yuan undervalued. In fact, it will impose custom duties on (already declining) Chinese exports in order to boost the US economy. Beijing (which holds half of all US public debt) warns that it might trigger a trade war.
If it gets through the House of Representatives and is signed into law by President Barack Obama, the bill would authorise the Trade and Treasury Departments to take action against governments that manipulate their currencies, in particular China. The bill was adopted by 65-35 margin after going through all procedural votes in the Senate.
However, the legislation has few chances of surviving the Republican-controlled House of Representatives. House Speaker John Boehner called it in fact “dangerous”.
For China’s official news agency Xinhua, the US Senate has created a time bomb that could lead to a trade war between the world’s two largest economies.
The bill, which is tougher that previous proposals, would penalise Chinese exports by allowing the Trade Department to impose countervailing duties.
Meanwhile, China itself is going through tough economic times. Its exports in September showed the weakest growth of the last seven months, whilst imports rose by 20.9 per cent.
These figures constitute a danger for the government, already hard pressed by rapidly rising inflation, (and cause of tens of thousands of episodes of unrest), and by the never-ending need to create jobs, even at low wages.