House Democrats push for vote on China currency
WASHINGTON (Reuters) - Democratic leaders in the House of Representatives on Thursday said they would try to force a vote on a China currency bill that House members overwhelmingly approved last year but that died in the Senate.
House Democratic Leader Nancy Pelosi said party members were circulating a "discharge petition" to force Republicans who control the chamber to bring the bill to pressure China to let its currency rise faster in value to the floor. That would require 218 signatures, she said.
"They (Republican leaders) won't bring it to the floor, we are moving to discharge this legislation," Pelosi said at a news conference announcing the petition drive.
The bill would clear the way for the U.S. government to consider currency undervaluation as a subsidy that can be offset with U.S. countervailing duties on Chinese goods.
While only a small portion of Chinese exports to the United States would likely be affected, the legislation would encourage U.S. companies to file more trade cases against Chinese competitors, analysts have said.
The House passed the bill last year by a vote of 348-79, with 99 Republicans joining 249 Democrats in support.
Representative Sander Levin, who was then chairman of the House Ways and Means Committee, spearheaded the drive. The Michigan Democrat said on Thursday the legislation is still needed because even though China's yuan has appreciated in recent years, "the playing field continues to be rigged."
However, the yuan ended at record high against the dollar on Thursday after China's central bank said further yuan exchange rate would help curb inflation and asset bubbles.
The Chinese currency has now appreciated 5.43 percent since it was depegged from the dollar in June 2010 and 1.75 percent since the start of this year.
But a new analysis this month from the Washington-based Peterson Institute for International Economics estimated China's yuan continues to be undervalued by 28.5 percent against the dollar.
U.S. critics say that gives China an unfair advantage by reducing the price of its goods sold in the United States and making U.S. exports to China more expensive.
OTHER U.S.-CHINA TRADE ISSUES
Republican leaders have said they have no plans to schedule a House vote on the bill. They have urged the Obama administration to focus instead on what they consider bigger problems in the U.S.-China trade relationship, like market access barriers and intellectual property theft.
The renewed push for China currency legislation comes as President Barack Obama is preparing to send free trade agreements with South Korea, Panama and Colombia to Congress for votes. The pacts are unpopular with many Democrats.
"We want to be very clear about the interest of America's workers and jobs in our own country and put that first," Pelosi said.
Michael Woolfolk, senior currency strategist at BNY Mellon in New York, said China has already allowed a 25 percent increase in its currency value since July 2005 and it is now rising in value at an average annual pace of 5 and 10 percent.
"That's about as fast as it can appreciate without causing undue economic damage to both countries," Woolfolk said.
But a 9.1 percent unemployment rate and slow pace of jobs growth are powerful issues heading into next year's U.S. presidential and congressional elections. Lawmakers are anxious to show voters they are taking action.
Republicans are pushing for lower taxes and less regulation to spur job growth, but huge trade deficits, particularly with China, are an issue that resonates with voters in key industrial states like Michigan, Ohio and Pennsylvania.
Levin told reporters on Thursday that Republicans should allow a vote on the bill if they are interested in protecting American jobs. He and many other lawmakers contend China's currency is undervalued by as much as 25 to 40 percent.
Meanwhile, Senator Charles Schumer circulated a letter to Senate colleagues this week informing them that he also intends to introduce a China currency bill soon.
A Chinese official in Beijing said exchange rates were not the main cause of the U.S. trade deficit with China, which hit a record $273 billion in 2010.
"We urge the members of the U.S. Congress involved in this to appreciate the importance of China-U.S. trade and economic relations, not to seek excuses to engage in protectionism against China, and to avoid harming broader Sino-U.S. trade and economic relations," Chinese Foreign Ministry spokesman Hong Lei said.