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Tags: US | China | jobs | yuan | currency

Job Losses Push US to Crack Down on China’s Yuan

Thursday, 22 September 2011 11:18 AM EDT

Legislation aimed at pressing China to let its yuan currency rise has been propelled to the top of the U.S. Senate's agenda by concern about manufacturing job losses and anxiety about impending votes on three free-trade agreements.

Chances look good the Democratic-controlled Senate will soon pass a currency bill with support from Republicans, less than one year after it killed a similar measure that had passed the House of Representatives on a 348-79 vote.

At a time when Congress is deeply unpopular with the American public, Senate Majority Leader Harry Reid has embraced a get-tough-with-Beijing stance as part his jobs agenda even if it is not on President Barack Obama's, promising a swift vote to pressure China to let its yuan currency rise in value.

The first major jobs bill we're going to have is (to) send a message to the Chinese, where we've lost 2.8 million jobs during the last eight years, and that is we're going to do something about Chinese currency. And we're going to do that quickly," Reid said on Tuesday.

Lawmakers in both parties have complained for years that China's currency is significantly undervalued against the dollar, making it hard for many U.S. companies to compete against cheaper Chinese products.

Long-time proponents of legislation that would allow the U.S. Commerce Department to slap duties on goods from countries with "undervalued" currencies are cautiously optimistic both chambers will pass a bill this time around.

That would force Obama, who has yet to take a stance on the issue, to decide whether or not to sign the measure. He has already been accused by at least one Republican presidential candidate — Mitt Romney — of failing to act aggressively to level the trade playing field with Beijing.

Bill supporters are hopeful even though control of the House has shifted from Democrats to Republicans, whose leaders are closer to business groups opposed to the legislation.

"I think the chance of Congress passing legislation are very good," said Lloyd Wood, a spokesman for the Fair Currency Coalition, which includes labor, textile and steel groups.

"At the end of the day, a substantial majority of House Republicans are going to want this legislation to pass. And when you've got a large portion of your caucus that wants something, it ends up getting done," he said.

But a House Republican at the center of the action has shown little eagerness to jump on the Senate's fast-moving bandwagon.

"Let them do their thing. I plan to have a hearing on a number of issues involving China this fall. I think that's the direction we're going to take," House Ways and Means Committee Chairman Dave Camp told reporters last week.

Trade Deals Add to Pressure

A group of 51 business and farm groups, including the U.S. Chamber of Commerce and the Business Roundtable of corporate chief executives, warned lawmakers on Wednesday of the possible adverse effects of passing a bill.

Legislation that would increase tariffs on imports from China is unlikely to create any incentive for China to move expeditiously to modify its exchange policies," the groups said. "Rather, it would likely have the opposite effect and result in retaliation against U.S. exports into China — currently the fastest-growing market for U.S. exports."

But after a relatively quiet start to the year, pressure for action on a currency bill has been building for months because of the White House push to win approval of free-trade pacts with South Korea, Panama and Colombia.

Many Democrats are worried those free-trade deals could lead to U.S. job losses.

The left-leaning Economic Policy Institute estimated in a report this week that the huge U.S. trade gap with China has cost the United States 2.8 million jobs over the past decade.

The U.S.-China Business Council, which represents American companies that do business with China, said the report was based "on the faulty assumption that every product imported from China would have been made in the U.S. otherwise."

But Republican Representative Tim Murphy said it showed that Congress and the White House had a responsibility to act to keep U.S. factories open.

"Americans aren't losing their jobs because the Chinese are smarter or more productive. We're losing because the Chinese won't engage in fair and free competition," Murphy said.

Revived House Bill Gathering Support

In December, the Senate killed the broadly bipartisan House bill by declining to bring it up for a vote.

Senate aides said a crowded legislative schedule prevented Reid from scheduling action on the bill, but they also acknowledge the White House quietly pressed Senate leaders not to act.

The House bill's chief sponsor, Representative Sander Levin, a Democrat, has reintroduced the bill and it currently has 145 Democratic and 56 Republican co-sponsors. That is just 17 short of the 218 votes needed for House passage.

When House Republicans were in the minority last year, 99 voted for the legislation, 74 voted against and 5 abstained.

Two weeks ago, Romney — one of the leading Republican presidential contenders -- promised to sign an executive order on his first day in office that would threaten China with trade tariffs if it did not quickly revalue the yuan.

Statements like that, the growing number of Republican co-sponsors to the Levin bill, and the looming 2012 election give proponents hope that the House will eventually act.

If the Senate passes its currency bill as expected in October, advocates will have more than a year to win approval in the House before the current Congress ends.

"We believe frustration with the currency approach of the administration has risen to the point that House Republicans don't want to be seen as blocking action on the effort," said Gary Hubbard, a spokesman for the United Steelworkers Union.

© 2023 Thomson/Reuters. All rights reserved.

Legislation aimed at pressing China to let its yuan currency rise has been propelled to the top of the U.S. Senate's agenda by concern about manufacturing job losses and anxiety about impending votes on three free-trade agreements. Chances look good the...
Thursday, 22 September 2011 11:18 AM
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