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US Senate moves toward final vote on China currency bill
WASHINGTON (AP) ' The Senate on Thursday moved toward a final vote on legislation that would confront China over its practice of keeping its exports cheap by undervaluing the Chinese currency.
The bill is intended to impose enough trade penalties against China to offset the economic advantage China gains from keeping the yuan below market values. Supporters say that will make American producers more competitive and put Americans back to work.
The measure cleared an important procedural vote Thursday, and Senate Majority Leader Harry Reid, a Democrat, said he wanted a vote on passage either late Thursday or Friday.
The White House has raised concerns about taking unilateral action against the Chinese and multinational corporations that do business in China widely oppose the plan, fearing it could lead to a trade war.
President Barack Obama said a news conference Thursday that it was "indisputable" that the Chinese "intervene heavily in the currency markets." He said China "has been very aggressive in gaming the trading system to its advantage and to the disadvantage of other countries, particularly the United States."
He said the Senate bill was an effort to get at these practices, but he stressed that whatever tools are put in place must adhere to international treaties and obligations.
Obama neither endorsed nor opposed the Senate bill and the White House has expressed concerns about taking unilateral action against China.
The bill already faces an uncertain fate in the House. Supporters of similar legislation say they have 225 sponsors, a majority of the House. But the leader of the House, Speaker John Boehner, a Republican, has suggested he will not bring it to the floor, saying it was "pretty dangerous" to tell another country how to set its monetary policy.
But the legislation has bipartisan backing from senators responding to popular resentment to the way China has come to dominate U.S. markets and drive American manufacturers out of business.
Sen. Lindsey Graham, a Republican, cited estimates that China has cost the U.S. some 2 million manufacturing jobs in the past decade, and that the 30 percent advantage Chinese producers have because of the undervalued currency could prove devastating as China prepares to enter world markets in commercial aircraft and automobiles.
"We cannot continue to let China flaunt the rules," Sen. Chuck Schumer, a Democrat, said. If action isn't taken, "we may never recover as a country. This is serious stuff."
Economists agree that the yuan is undervalued by 25 percent to 30 percent against the dollar; some put it as high as 40 percent. The result is that Chinese goods are increasingly cheaper in the United States and U.S. products more expensive in China.
Chinese Foreign Ministry spokesman Ma Zhaoxu said in a statement this week that the bill violated World Trade Organization rules "and seriously disturbed China-U.S. trade and economic relations."
The measure would set up a process of imposing higher tariffs when a country's currency is misaligned so as to subsidize exports.
U.S. businesses are concerned the bill would case the Chinese to retaliate.
"Unilateral action by the United States will only serve to increase trade tensions and negatively impact the U.S. economic recovery during this fragile period in the global economy," Bruce Josten of the U.S. Chamber of Commerce wrote senators Wednesday.
Schumer responded that "to those who say we are in a trade war, we are in a trade war. We have our clocks cleaned every day and lose jobs every day because of unfair Chinese practices."
He noted that the trade deficit with China has gone from $10 billion 20 years ago to $273 billion last year.
The vote Thursday to advance the bill was 62-38. On Monday the Senate voted 79-19 to bring the bill to the floor. Thursday's narrower margin reflected a dispute between the two parties over what amendments will be allowed.
Regardless of the outcome of the currency legislation, the debate gave senators an opportunity to vent on a long list of Chinese practices that impede U.S. sales to that country, including violation of intellectual property rights, technology theft, cyber espionage and Chinese government subsidies to domestic industries.
Senate Foreign Relations Committee Chairman John Kerry, a Democrat, said it was "an important debate because I think China needs to carefully think about and process the substance of what people are saying here on the floor of the United States Senate." He added: "I don't think that we're here to rupture that relationship. I think we're here to send a message to the Chinese about the urgent need to repair it."