WASHINGTON, (Reuters) – The U.S. House of Representatives stepped up pressure on China to let its currency rise faster, passing a bill yesterday that could penalize Chinese goods, as lawmakers blamed it for lost jobs in America.
The bill is likely to fan the flames of a long-running dispute with China over trade and jobs, even though passage in the Senate remains far from a sure bet.
The bill passed with solid bipartisan support just over a month ahead of mid-term elections as voters focus on the still-struggling U.S. economy and persistently high unemployment. Many lawmakers both in the House and the Senate have complained for years that China’s policies create an unfair trade advantage, but this is strongest step taken yet.
The bill treats China’s exchange rate as a subsidy, opening the door to extra duties on Chinese goods entering the United States, some of which are already subject to special levies.
It passed by a vote of 348-79, with 99 Republicans joining 249 Democrats to pass the bill. Five Democrats and 74 Republicans voted no.
Any vote in the Senate, however, won’t come until after congressional elections on Nov. 2 when the U.S. political landscape could be greatly changed.
“China’s persistent manipulation of its currency contributes to the outsourcing of American jobs and poses a very serious problem that requires real action,” said House Ways and Means Committee Chairman Sander Levin.
House Speaker Nancy Pelosi said the bill would give President Barack Obama leverage in talks with China and “make it clear that if China wants a strong trading relationship with the United States, it must play by the rules.”bill. But after the vote, a Treasury Department spokeswoman said the legislation reflected the “serious concerns” in Congress about China’s currency practices.
“The president and Secretary Geithner share those concerns. They both have said repeatedly that China needs to allow a significant, sustained appreciation over time,” she said.
Before the House vote, China’s central bank reaffirmed its pledge to increase the flexibility of the yuan and improve the way it manages the exchange rate. Obama and Chinese Premier Wen Jiabao talked about China’s currency and huge trade surplus with the United States on the sidelines of the U.N. General Assembly last week.
Despite the yuan’s modest gains against the dollar since Beijing allowed more movement in June, International Monetary Fund economists estimate the yuan is 5 percent to 27 percent undervalued.
