A bipartisan group of senators on Wednesday introduced legislation to give the US new tools to fight currency manipulation, an effort aimed mainly at China, just days before US President Barack Obama and Chinese President Xi Jinping (習近平) will meet for an informal retreat.
The bill is similar to legislation the House of Representatives and the Senate passed separately in 2010 and 2011, but which failed to win final congressional approval. The new effort comes despite a recent rise in the Chinese currency to the highest level since 2005.
Obama and Xi are to meet at Sunnylands, an estate near Palm Springs, California, this weekend for an informal meeting aimed at easing mistrust between the world’s two biggest economies.
“The single biggest step we could take today to create jobs in American manufacturing is to tackle China’s currency manipulation,” Senator Charles Schumer, a Democrat, said in statement.
“That’s why we’re making a renewed, bipartisan push to get this bill passed and on the President’s desk, and send a strong message to the Chinese government that the rigged game must come to an end,” Schumer said.
A bipartisan group of House lawmakers in March restarted an effort to pass the bill, which House Speaker John Boehner, the top US Republican, has blocked on the grounds that it could start a trade war with China.
US lawmakers accuse China of deliberately undervaluing its currency to give Chinese companies an unfair price advantage in international trade. A rise in the value of the yuan against the US dollar in recent years has taken some of the steam out of that argument.
On Tuesday, the People’s Bank of China fixed the yuan’s mid-point versus the US dollar at 6.1735, the highest since a landmark revaluation in 2005.
Still, the persistently high US trade deficit with China set another record at US$315 billion last year, fueling a perception in Congress that China is an unfair trader.
The bill would expand US law that allows the Department of Commerce to impose “countervailing duties” against subsidized imports by requiring the department to investigate if currency manipulation is a form of subsidization.
The department has refused to take that step, even though many lawmakers believe it already has the authority to treat undervalued currencies as an illegal trade subsidy.
Another provision would require the Department of the Treasury to designate countries with “fundamentally misaligned currencies,” including those that it is targeting for “priority action.”
That would replace a current semi-annual report, which charges the Treasury to identify any country that is manipulating its currency for an unfair trade advantage.
To the frustration of many lawmakers, the Treasury has not cited any country for currency manipulation for two decades.
“It is universally accepted that China and other major countries intentionally manipulate their currency to create an advantage for themselves in the marketplace” said Senator Lindsey Graham, a Republican.