House Approved Bill Against Chinese Currency Undervaluation Policy
The House of Representatives in the United States approved a bill that would allow them to take economic sanctions against China, which the U.S. accuses of undervaluing its Yuan.
A bill that would allow the U.S. an economic retaliation against China was approved on Wednesday in the House of Representatives. The U.S. accuses China that it undervalues its currency to promote exports, which would seriously affect American businesses, putting them in the face of unfair competition.
The text of the law allows to impose customs duties, thus penalizing imported products from countries that undervalue their currency. The law passed in the House of Representatives with 348 votes for and 79 against, and voting will be subject to Senate ratification.
Undervaluing the Yuan has been discussed by President Barack Obama during last week’s meeting with the Chinese Prime Minister Wen Jiabao. The American President said then that the U.S. trade deficit has gravely suffered from China’s monetary policy.
China’s exports increase the number of unemployed Americans
Supporters of the law say that China’s exports fostered by an undervalued Yuan has led to loss of jobs to over two million Americans in the last decade. The Chamber of Representatives, Nancy Pelosi, said that over the past 20 years, the U.S. trade deficit against China has risen to five billion dollars a year to five billion per week.
“We take these measures because one million jobs could be created in the United States if China would quit the government intervening in currency value and would allow it to naturally respond to market pressures,” said Nancy Pelosi.
American manufacturing industry representatives say that the Chinese currency is undervalued by about 40% against the dollar.
Jiang Yu, the official representing China’s Foreign Ministry said after the positive vote in the House of Representatives that the measure taken by the U.S. will affect the economy of both countries. “Using the Yuan’s exchange rate as an excuse for protectionist trade practices against China can only damage the trade between the two countries,” said Jiang Yu.11