TOPICS > Economy

Senate Considers Bill to Punish China Over Currency Valuation

October 3, 2011 at 12:00 AM EST
For years, American lawmakers have targeted China's currency, saying it has been deliberately undervalued to give Chinese companies price advantages in international trade. Kwame Holman reports on a Senate bill under consideration that would allow countervailing duties on Chinese good for currency manipulation.
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JUDY WOODRUFF: The stage is now set for a Senate debate over punishing one of the nation’s most aggressive competitors. A bill aimed at China’s currency cleared a 60-vote threshold this evening. The move comes as unemployment here in U.S. remains high and jobs continue to go overseas.

NewsHour congressional correspondent Kwame Holman has our story.

KWAME HOLMAN: The colorful Chinese currency, known as the renminbi or yuan, has been a target of U.S. political leaders for years. They argue it’s deliberately undervalued to give Chinese companies price advantages in international trade.

The issue reached the U.S. Senate today in a bill to allow countervailing duties on Chinese goods for currency manipulation. Economic action against China has undeniable political appeal as lawmakers watch jobs moving to China, even as American unemployment sits stubbornly above 9 percent.

SEN. JEFF SESSIONS, R-Ala.: We need to fight for and defend aggressively every single job this country has. As against unfair trade practices, we need to say no.

SEN. CHARLES SCHUMER, D-N.Y.: They use the rules of free trade when it benefits them and spurn the rules of free trade when it benefits them. And for years and years and years, Americans have grimaced, shrugged their shoulders, but never done anything effective to, in large measure, stop the Chinese pursuit of unfair mercantilism.

KWAME HOLMAN: Others warn the bill is not the way to address an undervalued Chinese currency, and it could have unintended consequences.

SEN. BOB CORKER, R-Tenn.: And so the United States Senate, a body of 100 people that are elected for six-year terms, wants to put in place tariffs on a major, growing country that we have growing exports to and create a trade war, a trade war between the two largest economies in the world? That’s our response?

KWAME HOLMAN: The U.S. Treasury Department historically has favored negotiations, instead of direct action. And it now says the Chinese currency has risen in value about 7 percent since June of last year.

At the White House today, spokesman Jay Carney said President Obama has not taken a position on the Senate bill yet.

JAY CARNEY, White House press secretary: We’re still in the process of reviewing it. We share the goal that it represents, which is to achieve further appreciation of China’s currency. We have seen some appreciation since last summer, which has been useful and good, but not enough.

KWAME HOLMAN: The Chinese say the Senate bill is expedient and shallow. In a commentary today, the state news agency, Xinhua, complained: “This has become a common practice. Whenever the U.S. economy is slow, whenever an election is nearing, voices in the United States pressing for the rise in the renminbi are all over.”

In fact, the issue has entered the 2012 Republican presidential campaign. But the candidates are divided over how to proceed.

MITT ROMNEY, (R) presidential candidate: We’re going to clamp down on China for not living by the rules that they signed up to live by. We’re going to make sure they get sanctioned.

JON HUNTSMAN, (R) presidential candidate: What will fix the U.S.-China relationship realistically is fixing our core right here at home, because our core is weak and it is broken. And we have no leverage at the negotiating table.

KWAME HOLMAN: The Senate’s debate is likely to consume most of this week, but even if the China currency bill passes there, Republicans in charge of the House say they have no plans to take it up.