US senators unveiled legislation Thursday to punish China over its alleged currency manipulation, promising angry American voters to put an end to Beijing's "economic murder" of US jobs
The measure aims to make it harder for the US Treasury Department to avoid labeling Beijing a currency cheat, triggering various sanctions, while making it easier for US companies to seek retaliatory tariffs on Chinese goods.
China's leaders "get away with economic murder" by keeping the yuan, and thereby the country's exports, artificially cheap, charged Democratic Senator Chuck Schumer, a key backer of the bill and similar efforts in past years.
US Treasury Secretary Timothy Geithner speaks on September 22, 2011 during the National Journal Live Summit
Schumer, his party's number three in the Senate, said US President Barack Obama opposed the measure but predicted "China will change its own behavior once this bill passes the Senate" in a vote expected in October.
The bill, which had support from several Republicans, would empower US businesses and, in some cases, labor unions to trigger a US Commerce Department investigation into alleged currency manipulation.
It also rewrites the law to make it harder for the US Treasury Department to stop short of declaring China a currency manipulator and makes manipulation punishable with countervailing duties on the offending country's goods.
And the bill aims to restrict the White House's ability to waive the resulting sanctions, notably by requiring reports to Congress detailing how the adverse of taking action outweigh the benefits.
Democratic Senator Sherrod Brown, who led the effort, said currency manipulation "is not competing, it's cheating" and promised the bill would mean "no more foot-dragging by our government" on confronting China.
But the bill's fate is unclear: Republican leaders in the House of Representatives have no plans to bring similar measures to votes in that chamber, according to a leadership aide.
And an army of 51 US industry groups this week stepped up efforts to block such legislation, warning in a letter to senators that it could spark a "counterproductive" trade war.
Far from forcing China to change its policies, the groups said retaliatory tariffs on Chinese goods "would likely have the opposite effect and result in retaliation against US exports into China."
Schumer, asked why he felt optimistic about the measure given the failure of similar bills since 2005, replied: "Just wait and see. This one's coming up and it's going to pass and it's going to send a shot across China's bow."
The Obama administration had no immediate comment on the bill.
But US Treasury Secretary Timothy Geithner earlier in the day called for "a stronger framework" in the World Trade Organization and the International Monetary Fund "that can better protect trade or exports from the kind of pressure that undervalued exchange rates can bring."
"We are trying to work to build a broader coalition of people to achieve that," he said.
Senators unveiled the measure amid deep anger at stubbornly high US unemployment of over nine percent, with the sour economy the top issue on voters' minds as the race to the November 2012 elections heated up.
A study released this week by the left-of-center Economic Policy Institute found that the US trade deficit with China has eliminated or displaced nearly 2.8 million jobs since 2001.
And US lawmakers have increasingly criticized Beijing on other economic issues, including rampant intellectual property theft like pirated movies and "indigenous innovation" policies that favor Chinese businesses.
In late 2010, Obama himself said in the heartland state of Iowa that the yuan was "undervalued" and was "a contributing factor" to the yawning US trade deficit with China.
In May 2011, however, the US Treasury Department declined in a formal report to brand Beijing a currency manipulator.
China has a history of allowing the yuan to strengthen slightly when it expects to come under heightened pressure over the value of its currency.