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Moves to increase pressure on policy makers

Updated: 2011-02-12 11:23

By Tan Yingzi (China Daily)

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Bipartisan US group's bill to push forex revaluation

WASHINGTON - A group of 101 US lawmakers have re-launched an attempt to push China into accelerating the process of yuan appreciation, despite its already rapid revaluation since June.

On Thursday, a bipartisan group of lawmakers in the House of Representatives introduced the Currency Reform for Fair Trade Act of 2011. The bill was also introduced in the US Senate.

A similar bill was passed by a solid margin by the House last year but was defeated in the Senate. If it passes through both houses of Congress, it will allow the Commerce Department to impose emergency taxes on Chinese products if the yuan is deemed to be undervalued.

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Yuan's appreciation no great help for US economy

The bill addresses the concerns of some US politicians, who have accused China of keeping the currency's value artificially low by between 15 and 40 percent to give its companies a price advantage in international trade.

The US lawmakers' action came after Federal Reserve Board Chairman Ben Bernanke and Treasury Secretary Timothy Geithner openly pressured Beijing this week to let the yuan rise, although a treasury department report on Feb 4 decided not to declare China a currency manipulator.

The yuan has appreciated 3.7 percent against the dollar during the past few months. On a real, inflation-adjusted basis, the appreciation has been even higher, rising at an annual rate of more than 10 percent, according to a recent report from the US Treasury Department.

The new push is likely to create more friction between Beijing and Washington, although analysts from both China and the United States initially expected the new House of Representatives, where Republicans hold a majority, to take a more subtle approach to China's exchange rate.

According to the Associated Press, the new Republican leadership said that passing the China currency bill is not a top priority this year.

President Hu Jintao said during his visit to the US last month that China will continue to reform its exchange rate and maintain a gradual rise in the yuan.

Many economists agree that the yuan's value is not the main cause for the China-US trade gap. The lack of manufacturing competitiveness in the US, its move to block high-tech exports to China and its miscalculation of China's exports are probably the real factors behind the gap, they said.

Internationally, the currency issue is likely to dominate next week's Paris meeting of the Group of 20 finance ministers and central bank governors.

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