US to pass legislation over China currency devaluation

US lawmakers are moving to pass legislation aimed at suppressing currency manipulation by Beijing following recent exchange rate shocks in China.

China launched its biggest devaluation of the yuan in 20 years on Tuesday with the country’s central bank putting the yuan’s central rate at 6.4010 yuan for $1, a drop of 1.11 percent from the previous day’s 6.3306.

The devaluation, designed to allow the yuan to float more freely in line with market rates, continued until Friday when the Chinese central bank raised the value of the yuan against the US dollar by 0.05 percent.

The marked devaluation of the yuan has caused Capitol Hill to press the White House to either address the global currency practices or risk greater opposition to President Barack Obama’s global trade agenda.

Rep. Tim Ryan (D-Ohio), along with dozens of other lawmakers, is pushing for ways to address currency more adequately in trade deals, according to The Hill.

Ryan stressed that China’s actions have provided the incentive lawmakers need to revive the issue in September.

“We can use the momentum from the last few news cycles to resuscitate this idea and get it moving again,” Ryan told The Hill in a phone interview.

China’s devaluation of its currency has “gotten everyone refocused” on legislation to penalize countries which deliberately manipulate their currency in order to make their products cheaper in the United States, said Ryan.

His legislation, along with other similar bills in the House and Senate, would address currency manipulation the same way as countries that use subsidies to sell their products in the US at artificially low prices.

The lawmaker asserted that Obama needs to take other measures, such as the threat of anti-subsidy duties, to fight currency manipulation.

According to some lawmakers, currency manipulation has cost millions of US jobs and led to a persistently high trade deficit, especially with China.

Sen. Sherrod Brown (D-Ohio), a critic of Obama’s trade agenda, plans to use China’s yuan depreciation to push for the inclusion of countervailing duties in a customs conference bill in the House.

“China will stop at nothing to give its exports an unfair advantage — the US should be even more vigilant about protecting American workers and manufacturers,” he told The Hill.

“China’s actions underscore the urgent need to ensure that final customs enforcement bill gives our government tools to protect American jobs when China cheats trade laws,” he added.

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