BEIJING (CWN) Ã¢â‚¬â€ China stepped up its criticism Tuesday of a proposed U.S. law to punish countries with artificially low currencies, saying there would be serious repercussions for the world’s two biggest economies if it is passed.
The criticism comes after U.S. senators voted Monday to open a week of debate on the bill that would allow the government to impose additional duties on products from countries that subsidize exports by undervaluing their currencies.
How worried China is about the proposed law can be seen by the fact that the Foreign Ministry, the Commerce Ministry and central bank all issued statements denouncing it.
But the legislation faces considerable hurdles before it becomes law. The Obama White House, while agreeing that China’s currency, the yuan, is undervalued, has been wary of unilateral sanctions against the Beijing government.
Chinese Foreign Ministry spokesman Ma Zhaoxu said the Senate move “seriously violated WTO rules and seriously disturbed China-U.S. trade and economic relations.”
Ma said China is reforming how it manages the yuan and that since June 2010 it had increased in value by 7 percent compared to the dollar.
He repeated Chinese comments that the exchange rate is not the cause of America’s big trade deficit with China.
Ma said in a statement that China is the fastest growing export market for the United States and trade is important to both sides.
“The Chinese side appeals to the U.S. side to abandon protectionism and not to politicize trade and economic issues, so as to create a favorable environment for the development of China-U.S. economic and trade ties,” Ma said.
Supporters of the legislation say it would create new jobs and boost the U.S. economy, but China, and some in the United States, say it could trigger a damaging trade war.
The Chinese central bank warned the proposed law would not fix the economic problems in the United States and could cause more serious problems.
If the bill passes, it “cannot resolve insufficient saving, the high trade deficit and the high unemployment rate in the U.S., and it may seriously affect the progress of China’s exchange rate reform and may lead to a trade war, which we do not want to see,” the bank said.
Commerce Ministry spokesman Shen Danyang said China has taken measures to increase U.S. imports and added Beijing hopes “the U.S. side can make positive efforts in substantially relaxing restrictions on exports to China.”