The China/U.S. trade friction appears to be escalating to a new level. A series of bills are now being introduced in both the U.S. House and Senate in an attempt to force China to allow the yuan to appreciate faster. This action occurred after angry senators and representatives criticized the U.S. Treasury Department for again failing to label China as a currency manipulator in its semi-annual report. In its report, the Treasury Department said China did not meet the requirement for manipulation. This motivated Senate Banking Committee Chairman Chris Dodd and his republican counter-part, Richard Shelby, to state that they were introducing a bill that would tighten the definition of "currency manipulation" used by the department. The bill would also require the U.S. Treasury Department to seek input from the IMF when manipulation is found and then submit a course of action to Congress within 30 days. Senators Charles Schumer and Lindsey Graham are again preparing a China bill as well.
Up to now, China has been very quiet regarding any comment on the anti-China legislation under development in the U.S. Congress, but that is now no longer the case. China’s Foreign Ministry told the press that any passage of legislation attempting to pressure China on the yuan/U.S. dollars exchange rate would not influence Chinese government policy. It also said that any tariff on Chinese imports would draw similar action from China. This has the potential to significantly impact U.S. exports of agricultural products to China. For the cotton industry, any additional tariffs would be devastating for exports. The U.S. Congress and Senate appear at this stage to be driven by domestic politics and are paying little attention to the appeals of retailers or economists.
source: globecotnews
