Senators caution China over currency controls
BEIJING – The U.S. Congress is in no mood to put up with further delays by China on relaxing its currency controls, three U.S. senators visiting Beijing said Tuesday.
The bipartisan delegation said the Senate is on the cusp of taking up a long-postponed bill that would slap a 27.5 percent tariff on all Chinese products to compensate for China’s pegged exchange rate. Debate could begin as soon as the end of next week.
“Our goal is to let the Chinese government realize that the politics of this issue is about to get out of hand,” said Sen. Lindsey Graham, R-S.C.
“We want them to understand … the feeling and the emotion in the electorate,” added Sen. Tom Coburn, R-Okla. Coburn said China, by sticking to a tightly controlled currency peg, is sailing into the kind of angry storm on Capitol Hill that earlier this month sank a White House-sponsored plan to sell cargo operations at major U.S. seaports to the United Arab Emirates.
Many U.S. economists say China deliberately undervalues its currency, the yuan, which unfairly lowers the cost of its exports and contributes to a trade surplus with the United States that surpassed $200 billion last year.
The currency dispute is one of several issues that have rocked Sino-U.S. relations in the run-up to Chinese President Hu Jintao’s visit to Washington in the second half of April. Protectionist sentiment is rising in both countries.
Sen. Charles Schumer, a New York Democrat and co-sponsor of the legislation, said he’s telling Chinese officials that the Bush administration lacks the clout to come to Beijing’s defense on the matter, despite a Republican majority on Capitol Hill.
“We want to make it clear to the Chinese that there’s such strength behind our bill that even if the president were to oppose it, it’s likely to pass, probably with a veto-proof majority in the Senate, and probably the House, too,” Schumer said.
The senators met Tuesday with Foreign Minister Li Zhaoxing and will talk with the head of China’s Central Bank, Commerce Minister Bo Xilai and Vice Premier Wu Yi, who’s the point woman on sensitive Sino-U.S. trade issues, later in the week.
Schumer said the group will listen to Chinese officials’ currency plans before deciding whether to proceed with a vote on its bill by March 31.
“What we have to see is gradual but inexorable progress,” Schumer said at the start of the trip. Asked what China should do, Schumer said: “Our goal is for China to move on their own. … There are no magic words.”