The US Senate has passed a bill that will put pressure on China, which it claims is undervaluing its currency, the yuan.
Some US lawmakers have been arguing that China has been keeping the value of the yuan low to support its booming exports business, and that the country has been getting an unfair advantage because of it.
Senate and the House
The legislation was passed 63-35 in the majority-Democrat Senate, passing the bill forward to the House of Representatives.
The bill does not look as though it will be passed by the House, however, as Republican leaders are wary of the bill causing a trade war with China. Many business groups also argue that putting pressure on the yuan means pressure on trade relations with China.
The Chinese foreign ministry said in a statement that the bill “obstructs China-US economic relations and trade,” and has called the move “protectionist.”
Despite the fact that the bill is likely not to pass in the House, many are saying that it indicates that the US must confront China on its trade policies.
“There are always people who don’t want to stand up to China and I think they are, frankly, undercutting our ability to stop the haemorrhaging in our manufacturing jobs,” said Senator Sherrod Brown, a Democrat from Ohio.
Last year, China had a $273 billion trade surplus with the US. Critics argue that this is because the low-level yuan makes China’s exports cheaper in the US, and hurts American manufacturing by making Chinese imports from the US too expensive.
The bill in question would allow the US government to levy “countervailing duty” tariffs on imports from countries that the US deems are deliberately keeping their currencies low.
Critics of Chinese trade policy say that the yuan is undervalued against the US dollar by 40%, but most analysts say the figure is somewhere between 25% to 30%.
Chinese critics of the bill say that the US trade deficit with China is a result of the country’s own economic policies, and not the value of the Chinese currency.