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China to US on currency bill: I wouldn't do that if I were you

The US Senate passed a currency bill that would punish countries that subsidize their exports by maintaining an artificially low exchange rate. China called such a law a 'lose-lose' for both sides.

Image

In this Sept. 30 photo, visitors look at an artwork depicting a 100-yuan Chinese currency at the 2011 Chengdu Biennial in Chengdu in southwestern China's Sichuan province. Reflecting growing anger in the US about the loss of jobs to China, the Senate passed a bill that would punish countries that subsidize their exports by maintaining an artificially low exchange rate.

AP

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China left no doubt Wednesday as to what it thought of a new US Senate bill aimed at forcing Beijing to strengthen the value of its currency: The Central Bank devalued it as much as it could.

The bill, passed Tuesday evening, “will not solve US economic and employment problems and will only disturb … efforts to promote world economic recovery,” said Chinese Foreign Ministry spokesman Ma Zhaoxu in a statement.

Reflecting growing anger in the US about the loss of jobs to China, the Senate passed a bill that would punish countries that subsidize their exports by maintaining an artificially low exchange rate. Washington has long been pressing Beijing to let its currency rise, making US goods cheaper in China and thus helping US exports.

Administration officials say they support the bill’s goals, but worry that it might violate US obligations under World Trade Organization rules. The bill is not expected to pass the House of Representatives, where Speaker John Boehner has called the legislation “dangerous.”

China: Exchange rate is not the problem

In a research paper published Wednesday, the Chinese Central Bank insisted that the Chinese currency, the yuan, “is gradually approaching a reasonable and balanced level.” In a managed process, the bank has strengthened the yuan by 30 percent since 2005, but this has not prevented the US trade deficit with China from widening.

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