Anti-China Legislation Heads to Vote in Congress

Just as I was getting set for a restful weekend, the news intervened. H.R. 2378, better known as the "Currency Reform for Fair Trade Act," is now set for a vote in the House of Representatives this coming Wednesday, September 29 after successfully clearing the Ways and Means Committee. The immediate retort would be that there have been many currency bills in recent years aimed at punishing China over its alleged currency manipulation, none have ever gotten anywhere. With a moribund US economy. continued US-China jousting, limited yuan revaluation, and an important midterm election coming up, will these factors finally be enough for some real China bashing action?

Legislation pressing China to raise the value of its currency is set for a vote in the U.S. House next week, as Republicans joined Democrats in expressing frustration that the yuan is appreciating too slowly. “We cannot wait any longer to level the playing field for U.S. businesses and protect American manufacturing jobs,” Democratic Leader Steny Hoyer of Maryland said yesterday after the Ways and Means Committee sent the bill to the full House.

The committee adopted the measure by voice vote after the panel’s top Republican, Dave Camp of Michigan, voted with Democrats to back the bill. The full House will vote Sept. 29, said committee Chairman Sander Levin of Michigan, a Democrat. The measure would let companies petition for higher duties on imports from China to compensate for the effect of a weak currency. President Barack Obama’s adminisration hasn’t taken a position on the bill, said Natalie Wyeth, a Treasury Department spokeswoman...

Lawmakers [s]ay they are also frustrated with barriers China has raised to American imports and the piracy of copyrighted American movies, music and software. The currency dispute “is a proxy for the state of the overall U.S.-China commercial relationship,” William Reinsch, president of the Washington-based National Foreign Trade Council, said Sept. 23 on Bloomberg Television. “I don’t think it will have that big of an impact on the American economy...”

Fred Bergsten is keen on letting China feel some heat from Washington. Barack Obama seemingly making little headway with Hu Jintao at the sidelines of the UN over the currency issue also seems to raise the stakes:

Forcing China to raise the value of its currency may create 500,000 jobs in the U.S., most in manufacturing at above-average wages, according to C. Fred Bergsten, director of the Peterson Institute for International Economics in Washington. China’s currency, which is undervalued by as much as 25 percent, is the most important trade issue facing the U.S., he said in testimony last week.

Obama pressed China’s Premier Wen Jiabao in a two-hour meeting at the United Nations Sept. 23 to increase the yuan’s value. Wen said this week that a 20 percent increase in the currency would cause severe job losses and trigger social instability in China.

Will these bellyaching lawmakers finally grab China by the collar having failed to do so many times before? Remember that there's a separate bill working its way through the senate (S. 3134). Our friends at the IELP have more on the technical details of "export contingency" [1, 2]. The stakes are high and we're certainly approaching put up or shut up time. As before, the time is always right for these belligerents to cut the crap and start fighting already. While the sponsors' motives may be deplorable, I certainly think it's better to shake things up and see if we can escape the rut we're in called subprime globalization instead of same old, same old.

Ladies and gentlemen, in the red(s) corner, weighing in at $2.4 trillion worth of reserves...

UPDATE: The usually bellicose official outlet The Global Times is strangely subdued in response to this legislative manoeuvre.