The members of the US House of Representatives have passed the bill against the cheap Yuan. 348 congressmen voted FOR approving the bill, with only 79 voting AGAINST it. And there is nothing special about it. In the run-up to the elections the congressmen strive to show that they defend the US labor market both in word and deed as they want to be reelected. Yet, the labor market is still facing 9.6% unemployment. According to experts, the Senate, where the bill is to be passed in November, won’t have any difficulty passing it either. After that American companies will get the right to complain and to claim the imposition of duties on cheap Chinese products.
When China was producing light-industry products, filling the global market, including the USA, with cheap sneakers and T-shirts, nobody was concerned about the cheap Yuan. But with the lapse of time Chinese manufacturers got stronger and start competing with developed countries in the sector of advanced technology products. China produces cheaper analogs of western products. If to consider the cheap Yuan, Chinese products become even more competitive. That is why western producers have shown growing concerns over the Chinese trading expansion.
Washington believes that the lowered Yuan currency rate is the main reason for the big trading deficit between China and the USA and the growth of unemployment in the US. In order to protect the American producers the congressmen has developed a draft law allowing the US government to take tough measures against the Chinese “national currency manipulation”. The starting process of adopting the law has been successful. On Wednesday the House of Representatives of the US Congress passed the bill, which is to increase the pressure on China through the right to impose import duties on its products, trying to make China revaluate its national currency.
According to Washington, within the next 2 years China must increase the Yuan currency rate by at least 20%. First of all it will allow the US to reduce its deficit of trade with China, which has already reached $145 billion.
Numerous analysts find the US claims impossible to fulfill, as the increase claimed is very sharp.
According to the survey carried out by Bloomberg, most analyst, traders and investors do not believe that China is going to take any active steps towards revaluating its national currency till the end of 2011.
About 70% of interviewees forecast that the devaluation over the period won’t reach 20%, as it is desired by Washington. It will be restrained to a couple of percents.
China condemns the draft law aimed at imposing compensatory custom duties on the products of those countries, where the national currency rate is used to gain favorable conditions in trading with the US.
China’s prime minister Wen Jiabao notes that if China raises the Yuan rate against USD within such a short period of time, the Chinese economy will suffer serious problems.
In this case it is even impossible to image how many Chinese companies will go bankrupt and how many Chinese workers will lose their jobs. It will lead to serious social consequences in the Eastern state. That is why the Chinese government is not going to revaluate the national currency by 20-40%.
As for the United States’ negative trading balance with China, Wen Jiabao believes that the reason for it is not the cheap Yuan, but the structure of investments and trading.
If the US Congress ultimately adopts the law there will be a storm of criticism from China and ambiguous evaluation of the world community.
China has already stated that the US draft law contradicts the principles of the WTO. So the Chinese government will file a complaint to the WTO in case the sanctions are introduced. Numerous experts believe that the Chinese standpoint will get the WTO’s support.
When China was producing light-industry products, filling the global market, including the USA, with cheap sneakers and T-shirts, nobody was concerned about the cheap Yuan. But with the lapse of time Chinese manufacturers got stronger and start competing with developed countries in the sector of advanced technology products. China produces cheaper analogs of western products. If to consider the cheap Yuan, Chinese products become even more competitive. That is why western producers have shown growing concerns over the Chinese trading expansion.
Washington believes that the lowered Yuan currency rate is the main reason for the big trading deficit between China and the USA and the growth of unemployment in the US. In order to protect the American producers the congressmen has developed a draft law allowing the US government to take tough measures against the Chinese “national currency manipulation”. The starting process of adopting the law has been successful. On Wednesday the House of Representatives of the US Congress passed the bill, which is to increase the pressure on China through the right to impose import duties on its products, trying to make China revaluate its national currency.
According to Washington, within the next 2 years China must increase the Yuan currency rate by at least 20%. First of all it will allow the US to reduce its deficit of trade with China, which has already reached $145 billion.Numerous analysts find the US claims impossible to fulfill, as the increase claimed is very sharp.
According to the survey carried out by Bloomberg, most analyst, traders and investors do not believe that China is going to take any active steps towards revaluating its national currency till the end of 2011.
About 70% of interviewees forecast that the devaluation over the period won’t reach 20%, as it is desired by Washington. It will be restrained to a couple of percents.
China condemns the draft law aimed at imposing compensatory custom duties on the products of those countries, where the national currency rate is used to gain favorable conditions in trading with the US.
China’s prime minister Wen Jiabao notes that if China raises the Yuan rate against USD within such a short period of time, the Chinese economy will suffer serious problems.
In this case it is even impossible to image how many Chinese companies will go bankrupt and how many Chinese workers will lose their jobs. It will lead to serious social consequences in the Eastern state. That is why the Chinese government is not going to revaluate the national currency by 20-40%.
As for the United States’ negative trading balance with China, Wen Jiabao believes that the reason for it is not the cheap Yuan, but the structure of investments and trading.
If the US Congress ultimately adopts the law there will be a storm of criticism from China and ambiguous evaluation of the world community.
China has already stated that the US draft law contradicts the principles of the WTO. So the Chinese government will file a complaint to the WTO in case the sanctions are introduced. Numerous experts believe that the Chinese standpoint will get the WTO’s support.
