US senators escalate yuan disp

By Qiu Wei

Chinese scholars and Internet users Wednesday voiced their overwhelming opposition to legislation proposed by US senators to punish China for its so-called currency manipulation.

More than 96 percent of about 7,500 Web users who participated in an online poll by huanqiu.com say China was justified to stand against US pressure and ignore its calls for yuan appreciation. The currency dispute seems to have triggered strong sentiments among the public of both countries.

China has a timetable and a pace to follow in foreign exchange reform, and a one-off appreciation of the yuan is not taking place any time soon, analysts said Wednesday, amid escalating foreign pressure on Beijing to revalue its currency.

Washington has become increasingly vocal on the issue, locking China and the US in a wrangle over the value of the yuan, in an argument in which confrontational actions seem to be brewing.

Taking an apparently tougher line, US senators unveiled Tuesday legislation that threatens heavy penalties if Beijing refuses to act. The bill would punish currency manipulation as an unfair subsidy and could trigger retaliatory actions.

"There is no bigger step that we can take to promote job creation here in the US than to confront Chinese currency manipulation,"said Democratic Senator Chuck Schumer, one of the 14 senators who backed the bill.

US Treasury Secretary Timothy Geithner warned Tuesday of a continuing high unemployment rate, currently at 9.7 percent. More than 8 million people in the US are believed to have lost their jobs since the recession began in late 2007.

He Weiwen, managing director of the China Society for World Trade Organization Studies, said the latest US moves were merely due to political concerns and that it is not necessary to strengthen the yuan.

"China is by no means in any position to sacrifice its own interests to help the US to boost employment. The US should not look for a solution in the yuan,"He said. "The US administration can't simply divert its domestic mess to other countries."

He offered that China could take countermeasures if the US ultimately recognizes Beijing as a currency manipulator, citing moves including appealing to the WTO, imposing similar penalties on US imports, and halting large procurements from the US.

Jiang Yong, of the China Institutes of Contemporary International Relations, said Washington was attempting to force China to make concessions on other issues by putting pressure on the yuan, such as increasing its holding of US Treasury bonds.

"To single out China's yuan policy will provide an excuse for the US to resort to trade protectionism,"Jiang said.

The introduction of legislation followed increased pressure by US lawmakers Monday ahead of November mid-term US elections, who urge Geithner to determine that Beijing manipulates its currency in a report due next month.

China reinforced its position Tuesday and rebuffed the calls. Commerce Ministry spokesman Yao Jian said the country's managed floating exchange rate system, in place since 2005, is market-based and the value of the yuan was not to blame for global trade imbalances.

The International Monetary Fund weighed into the argument Wednesday, saying the yuan is "very much undervalued"and appreciation is part of global economic rebalancing.

"It cannot be avoided, in some cases exchange rates have to appreciate, and that's the debate which is very well known about China and the value of the renminbi,"IMF managing director Dominique Strauss- Kahn told the European Parliament's economic affairs committee in Brussels.