WASHINGTON Aug 11 Senior U.S. lawmakers from
both political parties on Tuesday condemned China's surprise
currency devaluation as a grab for an unfair export advantage
and urged inclusion of currency manipulation curbs in a new
Pacific Rim trade deal.
Several members of Congress said the devaluation of the yuan
by China's central bank on Tuesday raised serious concerns. Some
suggested it was further proof China cannot be trusted on
China's 2.0 percent yuan devaluation came weeks ahead of the
first state visit to the United States by Chinese President Xi
Jinping amid other tensions over trade, cybersecurity and
"It's time for the administration to focus more intensively
on China's cheating and label the country a currency
manipulator," Democratic Senator Bob Casey, a member of the
Senate Finance Committee, said in a statement.
China's central bank said the devaluation resulted from
reforms meant to make its exchange rate more market-oriented.
A cheaper yuan will help Chinese exports by making them less
expensive for importing countries. Some lawmakers said the move
displayed China's intent to manipulate its currency to gain a
"China has manipulated its currency for a long time. This is
just the latest example, and it's past the time to do something
about it," said Republican Senator Chuck Grassley.
Grassley and Representative Sander Levin, the top Democrat
on the House of Representatives tax committee, suggested tough
anti-manipulation measures should be part of the Trans-Pacific
Partnership trade deal under negotiation.
Grassley and Levin said Congress should explore including a
provision in a customs bill being negotiated in Congress to
allow for penalties on currency manipulators.
Levin said there was "reason to be skeptical" that the
Chinese action was designed merely to move to a market-based
exchange rate and said it raised "serious concerns."
Chuck Schumer of New York, the No. 3 Senate Democrat, said
the Chinese currency should be barred from consideration as a
global reserve currency until China stops devaluing it.
At least two of the Republican contenders in the 2016
presidential race also weighed in.
"Today's provocative act by the Chinese government to lower
the value of the yuan is just the latest in a long history of
cheating," said Senator Lindsey Graham of South Carolina.
Real estate mogul Donald Trump, who has frequently promised
to be tough with Beijing, told CNN: "They keep devaluing their
currency until they get it right. They're doing a big cut in the
yuan, and that's going to be devastating for us."
However, many economists noted the Chinese currency has been
linked to the U.S. dollar for several years, and so has risen
against other major currencies as the U.S. dollar has risen 20
percent in the past year, making Chinese exports less
competitively priced than they were, contributing in turn to the
recent slowdown in Chinese economic growth.
"I don't see this affecting the Fed decision (to raise
interest rates) unless it develops into something that roils
markets substantially," said Peter Hooper, chief economist at
Deutsche Bank Securities and a former Fed economist.
"It adds a little more drag to the economy via net exports
and puts a slight damper on consumer prices, but not enough to
alter the course of the U.S. economy or labor market
significantly," he said.
(Editing by Kevin Drawbaugh and Clive McKeef)