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The currency bill that cleared the US Senate on Tuesday has angered Chinese leaders, who see the possibility that the legislation will take away China’s trade advantage. The regime has accused the US of violating world trade rules and trying to start a trade war.
The United States Senate passed a bill on October 11th, allowing US authorities to impose tariffs on goods from countries that undervalue their currencies. The legislation is aimed at China.
Although the bill still has to pass through the House before it can become law, the Chinese regime has reacted furiously. The Chinese Foreign Ministry is accusing the US of violating world trade rules.
The Chinese regime’s policy of undervaluing the renminbi allows Chinese exports to be artificially cheaper—giving a significant trade advantage over competitors. Business professor from the University of South Carolina Frank Xie, says the new law, if passed, could take away this advantage.
[Frank Xie, Business Professor, USC Aiken]:
“From the reaction of the Chinese regime one can see, that China is very worried about this. This is very natural, because first of all China is controlling its exchange rate, and secondly the Chinese regime relies too heavily on exports to the US. Once this law increases the tax (on Chinese goods), it will effectively cancel out this advantage.”
The Chinese regime has been investing a lot of time and money in lobbying US lawmakers in Washington to oppose the bill. According to an investigative report by Reuters, the Chinese Embassy in Washington has been paying $35 thousand a month to a lobbying firm to communicate with lawmakers’ offices on its behalf.
The Chinese regime has accused the US of starting a trade war with this legislation, yet not all analysts think it will lead to that...
