Biz groups fire back at yuan bill

Updated: 2011-09-22 11:03

By Zhang Yuwei (China Daily)

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NEW YORK - A group of 51 United States business and farm groups, including the US Chamber of Commerce and the Business Roundtable of corporate chief executives, said a bill aimed at pressuring China to appreciate its currency would have major adverse effects.

The bill has been gaining momentum in the US Senate due to fears that the US is losing too many manufacturing jobs only a year after the Senate had killed a similar bill.

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In a letter that the group of powerful business executives wrote to Senate majority leaders Harry Reid (D-Nev) and Mitch McConnell (R-Ky), they said, "Legislation that would increase tariffs on imports from China is unlikely to create any incentive for China to move expeditiously to modify its exchange policies. Rather, it would likely have the opposite effect and result in retaliation against US exports into China."

Reuters reported that Reid said Tuesday: "The first major jobs bill we're going to have is (to) send a message to the Chinese, where we've lost 2.8 million jobs during the last eight years, and that is we're going to do something about Chinese currency. And we're going to do that quickly".

Pressure for action on a currency bill has been building for months for another reason: The White House has begun to push to win approval of free-trade pacts with South Korea, Panama and Colombia, Reuters reported. US lawmakers believe the trade pacts could lead to further job losses.

US lawmakers from both parties have complained for years about China's undervalued currency. They have said that the yuan's exchange rate makes it hard for many US companies to compete.

The Economic Policy Institute (EPI), a nonpartisan think tank in Washington DC, on Sept 19 released an updated study claiming the growing US trade deficit with China cost 2.8 million jobs between 2001 and 2010.

Erin Ennis, vice-president of US-China Business Council (USCBC), which represents American companies that do business with China, said the report is based on "the faulty assumption that every product imported from China would have been made in the US otherwise".

"Much of what we import from China replaces imports from other countries, not products we make in the US today," Ennis said. "Rather than having a single-minded focus on China's currency, we should focus our efforts on addressing Chinese policies that keep US companies out of its market."

Exports to China outpaced US exports to the rest of the world, a trend that began in 2000 and has continued through 2010, according to a recent USCBC report.

"The nearly $76 billion increase in exports to China during 2000-2010 exceeded growth in every other market for US goods and farm products," Ennis said.

The group, in its letter urged the US Senate to: "oppose currency legislation and instead work with and vigorously call on the administration to develop a robust bilateral and multilateral approach to achieve tangible results, not only on China's exchange rate policies, but also on other Chinese policies that are harming American economic interests".

China Daily