China and US in currency war
Beijing (AsiaNews) – China vehemently attacked a bill passed last night by the US House of Representatives that would require retaliatory measures against China for keeping its currency undervalue. For Beijing, the bill jeopardises bilateral relations and violates the rules of the World Trade Organisation (WTO).
Members of the US Congress passed the bill by 348 votes against 79. Yesterday, US President Obama an event in Iowa criticised China for keeping its currency undervalued.
The bill formally opens hostilities between the two economic giants over China’s currency. For Washington, the Chinese are deliberately keeping the value of the yuan low to favour unfairly their exports. Under the new law, tariffs would be imposed on products from countries that fundamentally undervalue their currencies.
The House of Representatives Ways and Means Committee passed the bill last Friday, clearing the way for the full House to take up the measure yesterday. Now it goes to the Senate.
“The reason that I’m pushing China about their currency is because their currency is undervalued,” Mr. Obama said. “It’s a contributing factor to our trade imbalance,”
The US president had already expressed that position last week when he met Chinese Prime Minister Wen Jiabao on the margins of the General Assembly of the United Nations in New York.
The US administration has remained relatively cautious on the issue, partly to protect the bilateral relationship from shocks. However, in a recent testimony before Congers, US Treasury Secretary Timothy F. Geithner upped the ante, followed by the president.
Beijing’s response was swift. A Foreign Ministry spokesperson said that the new bill adopted by the US House of Representatives would seriously harm trade between China and the United States and that China strongly opposed the law.
China’s Commerce Ministry in Beijing also said that the bill violates World Trade Organisation rules. Anti-subsidy investigation on the basis of the exchange rate violates the same rules and traditional trading practices.
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