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 CHINA: Currency bill runs into opposition

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matwms
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PostSubject: CHINA: Currency bill runs into opposition   Mon Oct 10, 2011 8:52 am

Currency bill runs into opposition


Updated: 2011-10-07 10:09


By Zhang Yuwei (China Daily)









Trade war warning over move that would penalize countries with undervalued currencies

The United States Senate is debating legislation designed to press
China to let its currency rise, a move that has raised opposition in the
White House and in the House of Representatives.

On Oct 3 senators voted 79-19 to allow a week-long debate on the
Currency Exchange Rate Oversight Reform Act of 2011, which calls for US
tariffs on imports from countries with undervalued currencies.

The bill would require the Treasury Department to identify countries
whose currencies are undervalued. It could then order the Commerce
Department to impose duties on imports from such countries.

The US has been saying that China holds down its currency's value to
give its exporters an edge in global markets. But the yuan has
appreciated 7 percent against the US dollar since June last year and 30
percent since 2005. And the US trade deficit is still rising.

China's central bank, the People's Bank of China, expressed its "deep
regret" about the bill. It said such legislation might seriously affect
currency reform in China and could result in a trade war between the
two economies.

There are many reasons for the global trade imbalance, the bank said,
and the yuan's exchange rate is not the major reason for the trade
imbalance between China and the US.

A Chinese Foreign Ministry spokesman, Ma Zhaoxu, said such a move by
the US seriously violates World Trade Organization rules and obstructs
China-US trade ties.

Ma said the bill will "further escalate the exchange rate issue by
adopting protectionist measures on the pretext of a 'currency
imbalance'".

The sentiment is shared by the White House. On Wednesday the White House said the bill could violate international trade rules.

"We certainly have concerns about this particular legislation, and
whether or not it would create consistency issues with our international
obligations," said the White House spokesman, Jay Carney.

Monday's vote allowed the Senate to begin considering the currency
bill introduced by Sherrod Brown, an Ohio Democrat, and Charles Schumer
of New York, also a Democrat. Brown said he was confident the Senate
would approve the bill with minimal opposition.

After Senate approval the bill would go to the House of Representatives.

But House Speaker John Boehner, an Ohio Republican, has called the
bill dangerous and has said it is "well beyond what Congress ought to be
doing". Boehner said he had concerns over China's currency, but "I am
not sure this is the way to fix it".

Experts in Beijing say the legislation is a clear sign of trade protectionism.

"The bill is rising trade protectionism," said Ding Zhijie, a
professor of finance at the University of International Business and
Economics in Beijing.

The legislation would spark trade disputes between the two largest economies, harming the global economy, Ding said.

David Riedel, founder and president of Riedel Research Group, said he
believes the bill will not be adopted, that it is "pointless and
unnecessary" and that a trade war benefits no one.

"This is not an action that would even the paying field and would not
create jobs in the US. A trade war would not be in anyone's interest
and should be avoided at all costs.

"I believe that longer-term there has been an impact on US jobs and
economy from the emergence of China as a major exporter but the
connection in the short-term is minimal.

"Washington should be working on what they can do to improve the jobs
picture and economic situation here at home. Focusing on the Chinese
currency is a distraction from this larger effort."

US legislators who back the bill argue that more manufacturing jobs will be created in the US if the yuan is allowed to rise.

Many refer to a paper by the Economic Policy Institute in Washington
that says the growing US trade deficit with China has cost about 2.8
million American jobs over the past 10 years.

Erin Ennis, vice-president of the US-China Business Council, said the
institute's assumption is "decades wrong". "Much of what we import from
China replaces imports from other countries, not products we make in
the US today."

Other experts reckon all the bill will do is prompt manufacturers to
relocate production bases to cheap-labor countries such as Vietnam
rather than moving jobs back to the US.

Shaun Rein, author of the soon-to-be published book The End of Cheap
China, said the US government is running "one of the worst economic
policies of the last 50 years" and "their irresponsibility is causing
the world's financial problems, not China's currency policy".

"Appreciating the renminbi will not save American jobs. What it will
do is cause more inflation to America as manufacturers have to raise
prices or will cause more job creation in Vietnam and other lower-cost
producing countries."

Rein, who heads China Market Research Group in Shanghai, says most
big US companies his firm has interviewed want to keep the yuan low - an
opinion most executives will not voice publicly, Rein said.

In addition to opposition from the US-China Business Council, the
legislation is also opposed by business groups such as the US Chamber of
Commerce.

Before the Senate vote to conduct a debate, 51 US industry groups
wrote a letter to the Senate majority leader, Harry Reid, and the
minority leader, Mitch McConnell, urging senators not to adopt the bill
and warning that a "counterproductive" trade war may be the consequence.


The group, including farming and trading associations, wrote:
"Legislation that would increase tariffs on imports from China is
unlikely to create any incentive for China to move expeditiously to
modify its exchange policies. Rather, it would likely have the opposite
effect and result in retaliation against US exports into China."

US exports to China are a vital part of the US economic recovery,
says the US-China Business Council, which is based in Washington. China
is the third-largest US export market after Canada and Mexico, the two
US neighbors with whom the country has a free-trade agreement.

The business council says that last year exports to China rose 32
percent and that from 2000 to 2010 total US exports to China rose from
$16 billion (12 billion euros) to $92 billion (69 billion euros), or 468
percent. In the same period US exports to the rest of the world rose 55
percent, the council says.

"Exports to China contributed to growth and jobs in almost all congressional districts," Ennis said.

An editorial in The New York Times called the bill "the wrong way to deal with China".

"A Senate bill, with strong bipartisan support, to punish countries
that manipulate their currencies is a bad idea. It could do even more
damage to the American economy if - as is all too likely - China decides
to retaliate," the editorial said.

Li Xiang contributed to this story.
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PostSubject: Re: CHINA: Currency bill runs into opposition   Mon Oct 10, 2011 9:57 am

This is months and months old! July of this year.
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PostSubject: Re: CHINA: Currency bill runs into opposition   Mon Oct 10, 2011 10:08 am

The date is written different. Here is the link

http://usa.chinadaily.com.cn/business/economy_2.html

These are all the current articles.
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PostSubject: Re: CHINA: Currency bill runs into opposition   Mon Oct 10, 2011 10:14 am

seems our Congressmen should be focused on our issues and stay out of China's way, at least until we get our act together.
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PostSubject: Re: CHINA: Currency bill runs into opposition   Mon Oct 10, 2011 11:05 am

@matwms wrote:
The date is written different. Here is the link

http://usa.chinadaily.com.cn/business/economy_2.html

These are all the current articles.

Thank you! Embarassed Embarassed
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PostSubject: Re: CHINA: Currency bill runs into opposition   Mon Oct 10, 2011 11:45 am

So is this just more 'Smoke' to divert attention, or a 'Back Door Manuver' by the bad boys/elite, to stall the RV ?? The possible variations of senarios are endless and becoming less and less entertaining. What say we just get the RV DONE and get on with the rest of the details after... JMO (for the moment)
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PostSubject: Re: CHINA: Currency bill runs into opposition   Mon Oct 10, 2011 8:17 pm

I see this today Monday in the news.
I thought the RV would fix everything, yet there are many crisis going on ... are they just smoke to hide the RV coming ... or are they really relevant to what is going on.
There 's Germany, France, Greece, China . all in the economic news .. and the IMF is invloved in them all ... I thought the IMF knew about the RV .... how does this all play together .


Only wondering .

Someone wiser than I please put 2+2 together for me..... Thanks.

ATHENS (Reuters) - Greece moved closer on Monday to averting
immediate bankruptcy, wrapping up talks with EU and IMF officials on a
vital tranche of aid and expressing hopes of winning better terms on a
new bailout deal agreed by European Union leaders in July.

Without the next 8 billion euro aid installment Athens could run out
of cash as soon as mid-November, risking a default that would suck the
euro zone deeper into a debt crisis already shaking financial markets
worldwide.

"After a long series of talks and meetings with representatives of
the troika, we have concluded the circle of scheduled meetings and the
mission is expected to be concluded by tomorrow," Finance Minister
Evangelos Venizelos told lawmakers.

The EU, IMF and ECB mission chiefs, known as the troika, are likely
to conclude their visit to Athens by issuing a joint statement by
Tuesday. Back in Brussels and Washington, they will prepare reports for
euro zone finance ministers and the IMF's board, who will decide on the
aid tranche.

Greece has returned to the center of the euro zone debt crisis as a
deep recession and problems in implementing planned austerity measures
have upset the center-left government's deficit targets and threatened
to derail international bailout efforts.
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