Business council worries legislation against China counterproductive

NEW YORK - A group of 51 US business and farming companies and trade organizations, including the US Chamber of Commerce and the Business Roundtable, said legislation aimed at pressuring China to appreciate its currency would have major adverse effects.

In a letter to Senators Harry Reid and Mitch McConnell, the group wrote: "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."

A study released on Monday by the Economic Policy Institute, a think tank in Washington DC, claims China caused 2.8 million job losses between 2001 and 2010 as a result of the US' trade deficit.

Erin Ennis, vice-president of the US-China Business Council (USCBC), which represents US companies doing 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.

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

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

The group also 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".

Pressure for action on a currency bill has been building for months while Washington has begun pushing for the approval of free-trade agreements with South Korea, Panama and Colombia, Reuters reported. US lawmakers believe the trade pacts could lead to further job losses.

Lawmakers have complained for years about China's currency. They claim the yuan's exchange rate makes it hard for many US companies to compete.

A bill naming China as a currency manipulator has been gaining momentum in the US Senate from fears that the country is losing too many manufacturing jobs. That's only a year after a similar bill had failed to pass in the Senate.

"The first major jobs bill we're going to have is (to) send a message to the Chinese ... and that is we're going to do something about Chinese currency. And we're going to do that quickly," Reid said according to a report by Reuters.

China Daily