Bonds News
June 9, 2010 / 2:03 PM / 10 years ago
UPDATE 3-U.S. senators vow action on China currency bill
* Schumer eyes action on bill within next 2 weeks
* Graham says only Congress can fix problems with China
* House committee plans hearing on China's trade policies (Adds details on House hearing, paragraphs 11-12)
WASHINGTON, June 9 (Reuters) - U.S. congressional anger over China's currency and trade practices boiled over on Wednesday as senators vowed to pass legislation soon and lashed out at President Barack Obama's administration for failing to get tough with Beijing.
"Years of meetings and discussions with Chinese officials in an effort to persuade China to float its currency have repeatedly failed to produce lasting and meaningful results," Senator Charles Schumer told the U.S.-China Economic and Security Review Commission, a watchdog group appointed by Congress.
"No question, this is what is called a 'put up or shut up' moment for lawmakers," the New York Democrat said.
Schumer told the commission that he and other colleagues would push for a vote "in the next two weeks" on legislation that would allow the Commerce Department to use anti-dumping and countervailing duty laws against China or any other country with a fundamentally misaligned exchange rate.
He blamed China's undervalued currency for millions of lost U.S. manufacturing jobs and thousands of closed facilities.
Getting Beijing to allow its currency to rise to a more market-oriented exchange rate would do more to create jobs in the United States than any new stimulus package, Schumer said.
Many mainstream Western economists estimate China's yuan currency, also called the renminbi, is undervalued around 25 percent to 40 percent.
Critics argue that gives Chinese companies an unfair price advantage by effectively subsidizing their exports and taxing foreign goods sold in China.
U.S. Treasury Secretary Timothy Geithner delayed an April 15 report on whether China was manipulating its currency to give Beijing more time to act on its own. He has argued it is in China's own interest to reform.
Geithner, who was in Beijing two weeks ago for high-level talks, is expected to face questions on the issue when he goes before the Senate Finance Committee on Thursday.
Meanwhile, the House of Representatives Ways and Means Committee announced plans on Wednesday for a hearing on June 16 to examine China's trade and industrial policies.
"The United States cannot take a passive or 'hands off' approach to trade when China's government is actively seeking to misshape the terms of trade to gain a competitive advantage over U.S. businesses and workers," Committee Chairman Sander Levin said in a statement.
Senator Lindsey Graham, a South Carolina Republican, called China "a country without a soul in terms of what's right and what's wrong" and predicted there could more than 80 votes in the 100-member U.S. Senate for the legislation he has co-sponsored with Schumer and others.
"We have an unhealthy relationship with China and the only way we can get back to an even keel is for the Congress to insist to play by the rules," Graham told reporters after he testified before the watchdog commission.
In addition to manipulating its currency, China also keeps its market closed to many U.S. goods and allows widespread intellectual property theft, he said.
"The Obama administration hasn't been forceful enough," but neither was former President George W. Bush, Graham said.
Schumer and Graham are expected to offer their bill as an amendment to a broader piece of legislation, rather than try to pass it on its own.
For the bill to be enacted, it would also have to be approved by the House of Representatives and signed into law by Obama.
"There's a lot of pressure from the Obama administration to stop this legislation," Graham said.
The panel also heard from Senator Debbie Stabenow, a Michigan Democrat, who said she and Graham would introduce a separate bill next week barring the U.S. government from buying Chinese products until Beijing has joined the World Trade Organization agreement on government procurement.
Senator Sherrod Brown, an Ohio Democrat, told the panel he worried China was using its deep pockets to grab the world lead on clean energy manufacturing "while elbowing competition out of the way by discrimination against U.S. companies."
He urged the U.S. Trade Representative's office to launch a formal "Section 301" investigation to determine whether China is violating its WTO obligations,
"Just the launch of a '301' case by this administration will show China that we are serious about competing in this emerging market," Brown said. (Editing by Leslie Adler)