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WASHINGTON, April 28 (Reuters) - A top U.S. senator on Thursday said he was “more convinced than ever” of the need to pass legislation to force China to raise the value of its currency against U.S. dollar.
“Despite its rampant inflation problem, China’s government does not seem prepared to let the value of the yuan rise much higher above its present level,” Senator Charles Schumer said in a statement following a recent trip to Beijing.
“In our meeting last week, (China’s Central Bank) Governor Zhou repeatedly sought to portray the yuan’s recent gains against the dollar as adequate even though more aggressive appreciation is clearly needed,” he said. “I made clear to him that this would leave the U.S. Congress with no choice but to respond.”
China’s exchange rate policies have been a sore spot in U.S.-China relations for years with Washington accusing Beijing of deliberately undervaluing its currency to give Chinese companies an unfair trade advantage.
Schumer’s threat comes just a few weeks before top Chinese officials will be in Washington for high-level talks with U.S. Secretary of State Hillary Clinton and U.S. Treasury Secretary Timothy Geithner.
Last year, Congress came the closest ever to passing legislation to deal with the issue. However, a bill approved by the House of Representatives died in the Senate. The House bill clarified the Commerce Department could treat undervalued currencies as a subsidy under U.S. trade law, opening the door for companies to seek countervailing duties on Chinese imports.
Schumer and a bipartisan group of other senators backed a broader package that include other measures such as the threat of action at the World Trade Organization or barring China from the U.S. government procurement market.
“I am more convinced than ever that legislation is needed to force countries like China that manipulate their currencies to play by the rules and let their currencies freely float. Confronting this issue is an economic imperative,” said Schumer, the No. 3 Democrat in the Senate and a longtime critic of China’s exchange rate policies.
Reporting by Doug Palmer; editing by Bill Trott