The Senate next week is expected to approve legislation intended to stop China from manipulating its currency, a move that has lawmakers debating whether they might create American jobs or spark a trade war with China that would drive up consumer prices.
The bill, which targets China without mentioning it by name, cleared a critical hurdle Thursday, when 62 mostly Democratic senators voted to advance the bill toward a final vote.
The bill has the support of a dozen Senate Republicans, most of them from Southern states hit hard by cheap imports and foreign competition.
“I think the result of this [is that] it will give tools to the American government to fight back against unfair trade practices,” Sen. Lindsey Graham, R-S.C., a supporter of the bill, told The Washington Examiner.
Those backing the bill maintain that China has kept the value of its currency artificially low so it can sell its exports more cheaply to the United States and other countries. Imposing “retaliatory tariffs” would drive up the cost of Chinese merchandise entering the U.S., putting it on par with goods manufactured by American companies.
Opponents, including House Republicans who are likely to defeat the measure, say penalizing China would spark a trade war and drive up costs at a time when Americans are reeling from economic uncertainty.
Sen. Dianne Feinstein, D-Calif., described the bill as “a shot across the bow” of China and other countries that manipulate their currency to give themselves an advantage over U.S. companies.
“I believe we have to send a clear signal to China that they have to move faster to a market-based exchange rate,” Feinstein said.
China did take steps to assuage U.S. concerns about the yuan, raising it 21 percent against the dollar between 2005 and 2008. But Chinese officials still bend international trade rules to keep down the cost of their goods.
“There is damage being done to the middle class in our country and a large part of it is arising out of unfair trade practices,” said Sen. Jeff Sessions, R-Ala., the top Republican on the Senate Finance Committee. “We need to look for a way to create American jobs now. This is one of them.”
But many Senate Republicans oppose to the bill, including Majority Leader Mitch McConnell. House Speaker John Boehner, R-Ohio, called the legislation “dangerous” and said he has no plans to bring it up in the House.
“This is one of those things that plays well back home, but it’s a very poor policy,” said Sen. Bob Corker, R-Tenn., who opposed the bill. “This is all about politics. When you sit down and explain to people that on top of an economic slowdown and a financial crisis in Europe, [it becomes clear that] creating a trade war is not particularly intelligent.”
President Obama didn’t endorse the bill, but on Thursday accused China of “gaming the trading system to its advantage and to the disadvantage of other countries, particularly the United States,”
Democrats dismissed Republican threats of a trade war.
“Fundamentally, the Chinese are not going to initiate a trade war against their largest customer,” said Sen. Sherrod Brown, D-Ohio, who blames the loss of manufacturing jobs in his state on China’s currency policy. “We buy one-third of all Chinese exports.”
Read more at the Washington Examiner: http://www.washingtonexaminer.com/politics/2050/01/senate-approve-bill-targeting-china#ixzz1a3j2LTfq
