Angry Chinese officials unleashed a barrage of statements on Tuesday warning Washington that a bill aimed at curbing Chinese currency manipulation could spark a trade war, Reuters reported. Statements from the Chinese central bank, foreign ministry, and ministry of commerce all slammed the bill as an attempt by Washington to find a scapegoat for structural economic problems.
“China expresses its adamant opposition to this,” wrote foreign ministry spokesman Ma Zhaoxu in comments posted to China’s government website. He criticized the bill as “a protectionist measure,” and said “it is widely understood that the renminbi exchange rate is not the cause of China-U.S. trade imbalances.”
The bill “may seriously affect the whole progress of China's reform of its yuan exchange rate regime and may also lead to a trade war which we would not like to see,” China’s central bank said in a statement. The bank argued that the bill will not solve America’s problems, "such as insufficient savings, high trade deficit and high unemployment rate.”
Ministry of Commerce spokesman Shen Danyang added in a statement posted to the ministry's website that the currency manipulation bill would undermine Sino-U.S. cooperation on efforts to revive the global economy, which "needs a stable international monetary environment.”
The Senate will debate the Currency Exchange Rate Oversight Reform Act this week; the bill would place import tariffs on products from countries with undervalued currencies. Critics of Beijing's currency policies say China's undervalued currency gives it an unfair advantage, costs American jobs, and contributes to the trade gap between the world’s two largest national economies. The bill has bipartisan support and appears likely to pass the Senate; its reception in the House is less clear. The Chinese reactions to the bill underscore the foreign policy challenge that will face President Obama if it ends up on his desk.
The coordinated statements from Chinese officials show that the Chinese are taking this bill seriously, Reuters noted.
"It is very rare for three different ministries of the country to refute something so quickly and strongly, showing how deeply the Chinese government is concerned about the yuan bill," China Academy of Social Sciences researcher Wang Zihong told Reuters. "The strong responses made by the Chinese government may also suggest that the possibility would be quite high this time that the United States will pass the final bill in the end.”