U.S. punitive bill on Chinese currency

The U.S. legislature's proposed bill aimed at taking punitive measures against the Chinese currency is not likely to be made law, an expert said Wednesday, pointing to the uncertainties of the global economy. On Tuesday, the U.S. Senate passed a controversial bill that could punish China for its "undervalued" currency with retaliatory tariffs and other penalties. "We think this is an untimely move and believe the currency bill may not become policy, given it still needs to be passed by the House of Representatives and signed by the U.S. president," said Huang Yiping, an analyst at Barclays. "But the Senate's passage is already sufficient to sour the atmosphere for bilateral cooperation at a time when it is most needed to maintain global growth and stability." China has been under criticism from the U.S. for keeping its currency artificially low to boost exports, sparking global trade imbalances. Faced with such criticism, China says it has been seeking to gradually appreciate its currency, raising the value of the yuan 30 percent against the dollar since 2005. Huang noted that the U.S. and China need to work together to prevent the possibility of another financial crisis and global recession. The expert added that China's current account surplus has declined from above 10 percent of gross domestic product in 2007 to 2.8 percent in the first half of 2011. China's foreign ministry reiterated Beijing's opposition to the Currency Exchange Rate Oversight Reform Act of 2011, saying it will hurt U.S.-China relations. "China calls on the U.S. government, its congress and various communities to oppose the pressure put on the RMB exchange rate by domestic legislation and to tackle protectionism," Foreign Ministry spokesman Ma Zhaoxu said in a written statement. The statement also called for resistance against the politicization of economic and trade issues so as to safeguard the healthy development of China-U.S. economic and trade relations.