Republican US House Speaker John Boehner on Tuesday warned against passing “dangerous” legislation to punish China for its alleged currency manipulation, dealing a damaging blow to the bill’s prospects.
“It’s pretty dangerous to be moving legislation through the United States Congress forcing someone to deal with the value of their currency,” Boehner told reporters a day after the measure cleared a procedural hurdle in the US Senate.
“This is well beyond what Congress ought to be doing, and while I’ve got concerns about how the Chinese have dealt with their currency, I’m not sure this is the way to fix it,” said the speaker.
His comments came as the US Senate pressed ahead with the legislation, which envisions imposing retaliatory tariffs on Chinese imports if Beijing’s currency is found to be unfairly “misaligned,” and was expected to pass it this week.
“We can’t ignore blatant, unfair trade practices that put American workers at a disadvantage,” said Democratic Senate Majority Leader Harry Reid.
Lawmakers of both major US parties charge that China keeps the yuan unfairly cheap against the dollar, giving its goods as much as a 30 percent edge over comparable US products.
But Beijing has let the yuan rise against the dollar as it faces high inflation at home, and Chinese Foreign Minister spokesman Ma Zhaoxu said Tuesday that the measure amounted to “protectionism.”
“China firmly opposes this,” he added in a statement.
“This bill uses so-called ‘currency imbalances’ as an excuse, escalates the issue of the exchange rate, implements protectionist measures … and seriously interferes with Sino-US trade ties,” said Ma.
The bill was expected to clear the Senate this week, but the House of Representatives’ Republican leaders have made clear they have no plans to bring it to a vote in that chamber, stalling the bill indefinitely.
Republican leadership aides have said, however, that this could change if the issue became a core bone of contention between US President Barack Obama and his as-yet undecided Republican challenger in the November 2012 election.
The US business community mostly opposes the measure, citing concerns about embroiling the brittle US economy in a trade war and worries about the impact of a rising yuan on prices of commodities or other inputs upon which US firms rely.
Obama spokesman Jay Carney said Monday that the White House was still “reviewing” the measure and said there had been “some appreciation” of the yuan, “but not enough,” even as it warned against steps that might violate “our international obligations.”
China’s central bank has expressed “regret” at the bill, which would empower US businesses and in some cases labor unions to trigger a US Commerce Department investigation into alleged currency manipulation.
“We think there are many reasons for global imbalances, and the yuan exchange rate is not the main reason for the Sino-US trade imbalance,” it said in a statement.
“The differences in Chinese and US investment and trade structures, in deposit and consumer rates… and the unreasonable global currency system may be even more important elements than the currency exchange.”
The battle over the measure came as a new poll, released Monday, showed Americans sharply divided by party on whether Beijing is friend or foe.
Just 38 percent of Republican respondents in a CBS News/Vanity Fair survey said China was an “ally,” against 52 percent of Democrats and 42 percent of independents saying the same with the US presidential campaign heating up.
Fifty-five percent of Republicans said Beijing was an “enemy,” against 34 percent of Democrats and 42 percent of independents, according to the poll, which had an overall error margin of plus or minus three percentage points.
Seven percent of Republicans, 14 percent of Democrats and 16 percent of independents said they were unsure in which category to put China, which is widely blamed for US jobs losses, especially in the manufacturing sector.
The CBS News/Vanity Fair poll covered a random sample of 1,165 adults nationwide, reached by telephone August 19-23, 2011.