Political moves to twist Chinese Yuan \'s exchange rate has surprised economists and renewed concern over the consequences of externally manipulating a Yuan in isolation from the economy it supports. As the U.S. Senate debates legislation which, if passed, would slap tariffs on goods imported from countries the U.S. deems as undervaluing their currencies, a leading Australian economist has expressed astonishment at the move and the talk of a global trade war. \"I was a little surprised it took place.\" Warwick Smith, AM, the Chairman of the Australia New Zealand Bank (ANZ) in New South Wales, told Xinhua of the bipartisan bill which would make it easier for China to be labeled a currency manipulator and for trade sanctions to be imposed on Chinese goods. Smith said the decision to consider sanctions was surprising in the face of the Yuan\'s rise against the dollar last month after the central bank set a record high mid-point. The RMB has risen 3.24 percent so far this year -- and a whisper short of 7 percent percent since its de-pegging in June last year. The newly appointed head of the Australia China Council, (ACC) Smith said:\"Certainly there has been progress and the RMB is now tradeable through Hong Kong and that\'s increasing and they\'ve also lifted the valuation and that\'s important. \" The U.S. draft legislation doesn\'t mention China by name but the U.S. has long been banging a drum about China\'s low Yuan giving its exporters a competitive advantage. As the U.S. prepares for another election, Republicans in Congress are calling the proposal a \"dangerous\" over-reach by politicians. According to Bloomberg, Republican Speaker John Boehner of Ohio said on Friday that the bill could start a trade war. \"To force the Chinese to do what is arguably very difficult to do I think is wrong, it\'s dangerous,\" Boehner told the Washington Ideas Forum. \"Given the economic uncertainty around the world, it\'s just very dangerous and we should not be engaged in this. In Sydney, Smith, a former Federal Government Minister and current Chairman of E-Trade dismissed the idea of U,S.-Chinese economic warfare. \"I don\'t think there\'ll be a trade war,\"he said. \"We are going through a very significant economic dislocation following the global financial crisis and the difficulties that certainly major banks got into and so the re-correction and the period which it will take will see continuing tensions and one of these is the tension you\'re seeing expressed in congress. \" In Australia the firebrand independent senator Nick Xenophon has mimicked American politicians and sought an inquiry into Asian currency manipulation, but Treasury officials have signaled concern at the talk of any protectionist action that mirrors moves being made in the U.S.. There is an awareness in Australian economic circles of the historic precedent set by the trade protectionism that followed the great depression, which brought the world to the brink of financial disaster. The patchwork Australian economy is feeling the squeeze of its burgeoning dollar --- despite its 13 percent plunge from a July high --- with manufacturing and tourism major casualties. But while the powerful Australian Unions prepare to lobby the Gillard government for a higher Yuan, a growing number of international economists say that a stronger Yuan would simply shift manufacturing to a variety of low-cost labor markets from a diversity of options from Bangladesh, India or Vietnam, rendering most developed economies just as uncompetitive. Meanwhile, analysts at Societe General, have insisted that China is pushing for a further, gradual appreciation against the U. S. dollar, employing a model similar to Singapore\'s currency- management system. This is in contrast to the last global crisis in 2008 when China reasserted it currency peg to the U.S. dollar. In the document released in-house last week analysts wrote China was sticking with its appreciation policy with signs of \" important changes amid the unfolding global-debt crisis.\" The gradual appreciation of the Yuan is critical to both maintaining global economic pacing, but ensuring the continued growth and stability of the Asian economic revival. James Zhang a business lecturer at the University of Newcastle in Australia in analyzing he economic impact of the Chinese Yuan Revaluation said a 20 percent Yuan rise would contract the Chinese economy by some 12 percent. To place this in some context, in a workforce of almost 800 million, a 1 percent rise in unemployment would see 8 million jobless out on the streets. China\'s steadily appreciating Yuan continues to ensure social cohesion and manage both inflation and augment the domestic spending as part of the objectives of the 12th Five-year-plan. In Beijing, foreign ministry spokesman Hong Lei told Xinhua that the exchange rate was affecting the trade balance between China and the United States. He said China hopes the United States will refrain from politicizing the exchange rate and trade issues. Despite the obvious anxiety coming out of the United States congress at China\'s 37 percent stake in the 428 billion dollars US trade deficit Warwick Smith indicated the world\'s two major economies would find common ground as the global economy continued its volatile stretch. \"I am confident that the strength, the inherent strength of the U.S. economy and the growing strength of the Chinese economy will see that a mutuality between these two economies, and these two countries will ensure that they are able to trade with each other. Its in their mutual benefit to work out how you value currencies how you do that fairly and openly but it is a matter that\'s in transition during a very, very difficult time,\"he said.