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China calls for firm opposition to US legislation pressuring RMB exchange rate

 
 
 
 
 
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A spokesman with China’s Foreign Ministry on Wednesday called on the U.S. government, its congress and various communities to firmly oppose domestic legislation meant to pressure China’s currency, the Renminbi or yuan, into rising further.

“China calls on the U.S. government, its congress and various communities to oppose the pressure put on the RMB exchange rate by domestic legislation and to tackle trade protectionism,” Chinese Foreign Ministry spokesman Ma Zhaoxu said in a written statement on Wednesday morning.

Ma’s remarks came in response to the U.S. Senate’s passing of the Currency Exchange Rate Oversight Reform Act on Tuesday.

The bill is especially directed at China’s currency, which the United States claims is undervalued to make Chinese exports to the United States cheaper.

With the stated goals of reducing the trade imbalance between the two countries and creating more domestic jobs, the bill would make it easier for the U.S. government to designate China as a “currency manipulator” and slap retaliatory tariffs on goods imported from China.

But it is doubtful whether the bill will become a law, as it would have to clear the House of Representatives and then be signed by President Barack Obama before becoming law. Both Obama and House Speaker John Boehner have expressed reservations regarding the legislation.

According to Ma, the U.S. Senate bill is essentially practicing trade protectionism by making accusation of currency manipulation, which is a serious violation of the rules of the World Trade Organization.

The Renminbi strengthened 103 basis points to hit a record high of 6.3483 against the U.S. dollar on Tuesday, according to the China Foreign Exchange Trading system.

The currency has appreciated 23.3 percent against the U.S. dollar since a dollar peg was scrapped in July 2005.

The record high of the renminbi is believed to be the latest sign of the government’s efforts to increase the flexibility of the currency and to deepen exchange-rate reforms.

Chinese leaders have reiterated on many occasions that the country will continue to reform its exchange rate policy in a gradual and controlled manner while maintaining the currency’s basic stability.

Ma noted the legislation would not resolve problems in the U.S. economy or its employment rate, but would seriously disturb China-U.S. trade relations and undermine efforts made by the two nations as well as the international community in jointly promoting the strong recovery and growth of the world economy.

“[The bill] has nothing to gain and infringes others’ interests without benefiting its own,” Ma said.

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