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US yuan law will hurt world growth: China
01-10-2010, 01:04 PM.
Post: #1
US yuan law will hurt world growth: China
US yuan law will hurt world growth: China
by Agencies 05:55 AM Oct 01, 2010BEIJING - A measure passed by the United States House of Representatives aimed at pushing up the value of the yuan will hurt the global economy if it becomes law, the Chinese government warned yesterday.

The US House voted 348-79 on Wednesday to let American companies petition for duties on imports from China to compensate for the effect of a weak yuan. China said the legislation would do nothing to cut the US trade deficit and only risk harming world growth.

"We firmly oppose the US Congress approving such Bills," Chinese Foreign Ministry spokeswoman Jiang Yu said yesterday.

"We urge the US congressmen to be clearly aware of the importance of China-US trade and economic relations, and resist protectionism so as to refrain from any damage to the interests of both peoples and people around the world."

The US House vote highlights growing trade tensions between the world's two biggest economies. The US is enduring persistently high unemployment and a surge this year in the trade deficit with China, which rose 27 per cent to US$25.9 billion ($34 billion) in July from a year ago.

The Senate will not take up its version until after the November mid-term elections, said Senator Charles Schumer, a New York Democrat.

President Barack Obama's administration has not taken a position on the Bill.

China's central bank pledged on Wednesday to expand flexibility of the yuan, which has gained 2 per cent since a two-year peg to the US dollar was scrapped on June 19.

The yuan weakened yesterday for the first time in 13 days, dropping 0.1 per cent to 6.6933 to the US dollar. The central bank set the reference rate for daily trade weaker for the first time in three days.

Mr Liu Li Gang, a Hong Kong-based economist at ANZ Bank, said: "The fixing shows the Chinese government's attitude towards the vote. China wants to show it won't yield to any foreign pressure. It will determine the policy based on its own economic fundamentals."

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