UPDATE 2-China: Currency law would hurt U.S. jobs growth
* Beijing reiterates enactment of currency law would hurt ties
* Warns again of trade war if bill becomes law
* Says U.S. arms sales to Taiwan undermines China's core interests
By Michael Martina
BEIJING, Oct 10 (Reuters) - China warned the United States that it would damage relations, and American jobs, if it forces Beijing to let its currency rise under a law to be voted on in the U.S. Senate on Tuesday.
Vice Foreign Minister Cui Tiankai on Monday underlined Beijing's opposition to the bill, saying it could trigger a trade war and hold back global economic recovery. He said that relations could also be hurt by U.S. arms sales to Taiwan.
"(The currency bill) in no way represents the reality of the economic and trade relationship between China and the United States, and it might have an adverse impact on the development of the relations between the two countries," he said.
"Should the proposed legislation become law, the only result would be a trade war between China and the U.S. and that would be a lose-lose situation for both sides," said Cui, who currently heads the China delegation for G20 negotiations.
China's central bank, and commerce and foreign ministries last week jointly warned that enactment of the proposed currency law could lead to a trade war between the world's two top economies.
"If this type of situation occurs, of course it would be detrimental to the development of economic and trade relations between China and the U.S. and detrimental to U.S. economic and job growth," Cui said. "At the same time, it would hinder global economic recovery."
The White House has voiced concerns that the legislation, which calls for tariffs on imports from countries with deliberately undervalued currencies, could violate international trade rules.
Many economists say China holds down the value of its yuan to give its exporters an edge in global markets.
Beijing says it is committed to gradual reform of the yuan, which has risen 30 percent against the dollar since 2005.
U.S. supporters of the bill say the Senate is almost certain to approve it. But the bill faces stronger opposition in the House where it may never face a vote.
Cui also reiterated China's stance that U.S. arms sales to Taiwan seriously undermine the nation's core interests and would harm ties between Washington and Beijing, weeks after the United States said it would sell $5.85 billion in military hardware to the island China calls a breakaway province.
The sales to Taiwan have been a persistent irritant in Sino-U.S. ties, adding to economic strains between Washington and Beijing.
"These arms sales are not consistent with the trend and requirement of peaceful relations currently prevailing across the Taiwan Strait," Cui said. "From a long term perspective, I also don't think it serves the United States' own interests."
The Obama administration said last week that it is weighing fresh arms sales to Taiwan as part of a sweeping effort to deter any Chinese attack on the island.
Such supplies would be on top of plans sent to Congress on Sept. 21 to sell new hardware and defense services, including upgrades for Taiwan's 145 F-16 A/B fighter aircraft, bought in 1992.
Cui said China welcomed a positive and constructive U.S. military presence in the Pacific, but added that "some outside powers" had inflamed tensions in the disputed South China Sea. He did not specify which countries he was referring to.
"I think some people are stirring up the issue. That is to say, some people don't want to see stability in the region or the development of relations between China and relevant countries," Cui said.
China, the Philippines, Vietnam, Brunei, Malaysia and Taiwan have conflicting claims of sovereignty over parts of the potentially oil-and gas-rich body of water crossed by key shipping lanes and dotted with uninhabitable small islands, rocks and reefs.
China's growing military might at sea is triggering regional jitters that have fed into long-standing territorial disputes, but Beijing insists it is merely holding to its centuries-old sovereignty over the waters.
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