US senators to take warning for China
Washington, March 20:
Two US lawmakers were set to begin a visit to China today, carrying a warning that Beijing must undertake decisive reform of its currency regime or face trade san-ctions. Democratic Senator Chuck Schumer and his Republican colleague Lindsey Graham said China must revalue the yuan now if it wants to avert a vote by March 31 that could impose a hefty tariff of 27.5 per cent on its US-bound exports.
Their week-long trip, which the senators said has the blessing of the White House, comes as Chinese president Hu Jintao prepares to visit Washington next month. Schumer said the trip to Beijing, Shanghai and Hong Kong, which is being joined by Republican Senator Tom Coburn, would encompass meetings at the ‘highest levels’ of Chinese government.
“The need to go to China and really find what’s going on in the advent of the deadline for our legislation and president Hu’s upcoming visit is essential,” the New York se-nator said, “We truly ho-pe that we’re given some reason for optimism that China will revalue its currency and play by the rules on our visit.”
The senators argued that the yuan is undervalued by as much as 40 per cent against the dollar, dealing a crippling blow to US companies trying to compete aga-inst Chinese rivals. The currency exchange rate, critics contend, helped to drive up China’s trade surplus with the United States to $202 billion in 2005, the largest bilateral trade gap in history.
However, Chinese premier Wen Jiabao appear-ed to rule out any more reforms to the yuan exchange rate when he pr-omised ‘no more surprises’ on the currency. Since July, the yuan has been linked to a basket of currencies rather than peg-ged tightly to the dollar. But it has only risen abo-ut three per cent against the greenback since then.
“For us to put the vote off, I have to be convinced that it’s more than a fig leaf, that it’s real reform,” said Graham, who represents South Carolina, “The Chinese government needs to understa-nd that from all corners of this country, the frustration with their trading practices is at a boiling point. This is deadly serious. We know the consequences of our bill are deadly serious. I’m not doing this lightly. So I’m going with the idea of co-mmunicating the stress points and see what kind of action will follow.”
The senators’ mission comes as anger mounts in all branches of the US government over China’s exchange rate, its perceived inaction against rampant copyright theft and unwillingness to gra-nt access to US firms.