WASHINGTON — A politically popular bipartisan bill to crack down on China's currency policies was introduced in Congress on Thursday, even as American businessmen operating in China spent this week knocking on lawmakers' doors to urge them to focus more on opening Chinese markets to U.S. exports.
Sens. Charles Schumer, D-N.Y., and Lindsey Graham, R-S.C., have pushed a bill for more than five years that'd punish China for pegging its exchange rate to the dollar at what critics call an undervalued rate. On Thursday, they joined forces with Sens. Sherrod Brown, D-Ohio, and Olympia Snowe, R-Maine, to introduce a new measure.
It would instruct the Commerce Department to consider China's undervalued currency an illegal subsidy. With that designation, U.S. companies on a case-by-case basis could seek relief through compensatory penalties against Chinese imports.
"The decimation of our middle class, our manufacturing sector, and the American economy as a whole has come in large part because developing nations like China have used illegal currency manipulation and other aggressive, mercantilist tactics to tilt the playing field in their favor," Scott Paul, president of the Alliance for American Manufacturing, representing smaller U.S.-based manufacturers, said in a statement endorsing the bill.
A similar measure already passed the House of Representatives last year by a wide margin. Senate Majority Leader Harry Reid, D-Nev., has said he wants to have the bill on the Senate floor in coming weeks.
China's practice of fixing its currency, the yuan, to the dollar has been an irritant for years. Congress passed a law that requires the Treasury Department to report twice annually on whether China manipulates its currency. Treasury has voiced concern but stopped short of branding China a currency manipulator, preferring direct negotiations. Such a designation would anger China, which calls the actions protectionist. Neither country would benefit from a trade war.
The White House declined to comment Thursday when asked if President Barack Obama would veto China currency legislation.
American business executives who operate in China visited U.S. lawmakers this week, and some gained the impression that lawmakers' convictions about China's currency manipulation run shallow.
"Frankly, it seemed like a political gesture, because they talk about it and move on," said Robert Roche, an entrepreneur with ventures in China and vice chairman of the American Chamber of Commerce in Shanghai.
The business leaders insisted that the currency legislation wouldn't change the trend of lost U.S. manufacturing jobs.
"The jobs that left, they're going to go to Vietnam, Indonesia, they're not coming back to Ohio," said Roche, who asked lawmakers to do more to promote U.S. exports to China.
Roche and other business executives met with reporters Wednesday at a Washington event sponsored by the National Foreign Trade Council. The executives said that China's currency matters affect all outside countries equally, and that U.S. policymakers should focus more on access to the Chinese market, where not all players are equal.
The American Chamber advocates a bilateral investment treaty between the United States and China that'd give U.S. companies a more level playing field against competitors such as Germany.
"There's a whole range of market access issues," said James Rice, CEO of CSM Foods (Shanghai) Co. Ltd., which imports into China to produce pastry items sold at U.S. outlets there such as Starbucks and Wal-Mart.
U.S. exports to China continue to rise at healthy levels, but the U.S. share of what China buys from across the globe has actually fallen. One reason, said the business leaders, is that other countries do a good job at promotion. By contrast, the number of foreign commercial service officials in the U.S. Embassy and consulates in China greatly lags.
The American Chamber of Commerce in Shanghai is now working with U.S. diplomats to supplement diplomatic efforts to promote U.S. services and products in China, said Brenda Lei Foster, president of the AmCham.
The Obama administration has pushed China to sharply modify its controversial "indigenous innovation" policy, which gave preferential treatment to domestic companies in government purchases.
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