On the eve of Chinese President Hu Jintao's arrival in Washington, a group of Democratic senators unveiled legislation Monday that aimed at pressuring China over its currency policies.
As Washington prepares to welcome Hu on his first visit since President Obama was elected, Sen. Charles Schumer said he is preparing to introduce a bill that would allow the U.S. to take punitive measures if China doesn't let its currency, the renmimbi, climb more against the dollar.
“We are unveiling legislation today that sends a clear message to Chinese president Hu, we are fed up with your government's intransigence on the currency issue,” Schumer said in a conference call with reporters on Monday.
Joining Schumer on the call were Senators Debbie Stabenow, D-Mich., and Bob Casey, D-Penn. Senator Lindsey Graham, R-S.C., who has co-sponsored similar bills with Schumer in previous years, and is teaming up with him again this time.
Schumer and other lawmakers have been been threatening such legislation for years, often playing the "bad cop'' with public threats against China while Treasury officials under both President George W. Bush and President Obama have played the more diplomatic "good cop."
Schumer has proposed labelling China as a currency manipulator since 2003, when he introduced legislation to impose tariffs of more than 27 percent on goods imported from China.
The bill is a repeat of previous proposals to impose tariffs on goods from countries that manipulate their foreign exchange rate as a way of giving their exports an unfair price advantage.
U.S. officials have complained for years that China has deliberately undervalued the renmimbi in order to make its exports cheaper in dollar terms than they would be if the currency was valued at market rates. Chinese officials have allowed the renmimbi to climb slightly over the past year, but most analysts say it is still greatly undervalued.
Though Schumer and Stabenow both said they expect the bill to enjoy bi-partisan support, prospects for passage are slim. The group was unable to bring a similar bill to the floor for a vote in 2010, and its chances are no better this year in the largely unchanged Senate. Even if the bill does get a vote in the Senate, members of the House Ways and Means Committee, including Rep. Dave Camp, R-Mich., have said that another currency bill is not a priority in 2011.
Indeed, many lawmakers in both parties, as well as administration officials, worry that bringing such a bill to a vote would elevate the risks of a trade war that would cast a pall both the U.S. and Chinese economies.
Indeed, both Stabenow and Schumer implicitly acknowledged the bill's low prospects by emphaszing the goal of sending a "message" to the Chinese.
“We want to send President Hu a message, we want to export our products, not our jobs,” Stabenow said before tying job losses and reduced U.S. exports to currency policies in China. “We are losing jobs, it is time to stop this. Our message to President Hu is welcome to the United States but we want to make sure we have a fair trading system.”
Several other legislators also released statements Monday ahead of Hu's arrival. Senate Finance Committee Chairman Max Baucus, D-Mont., released called on China to go beyond promises and take action to “overcome the hurdles in our relationship.”
“A strong economic relationship between our two countries presents enormous potential for workers, ranchers, farmers, and manufacturers in Montana and across the United States, and benefits for the Chinese as well,” Baucus said. “But we must make meaningful progress on these critical issues so we can build a mature economic relationship that helps both our countries grow and prosper.”
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