(Reuters) – China’s Foreign Ministry urged U.S. lawmakers on Wednesday not to resort to “excuses” for trade protectionism after U.S. Senate Democratic Leader Harry Reid pushed for legislation aimed at forcing China to loosen controls on its currency.
“I want to stress that protecting the stable and healthy development of Sino-U.S. economic and trade relations is in keeping with the interests of both sides,” Ministry spokeswoman Jiang Yu told a regular news briefing.
“We urge members of the U.S. Congress to see clearly the importance of economic and trade cooperation between China and the United States, and it’s mutually beneficially, win-win character, and do not search for excuses to engage in trade protectionism against China,” she added.
Reid’s renewed drive for a yuan currency bill reflects the belief of many lawmakers that the United States’ huge trade deficit with China, which hit a record $273 billion in 2010, reflects Beijing’s currency exchange policies, which keep the yuan from rising in value against the dollar.
Many U.S. lawmakers and economists say China deliberately undervalues its currency, the yuan, against the dollar to give its companies an unfair price advantage in international markets. China rejects this criticism.
U.S. lawmakers have been threatening legislation since 2005 to punish Chinese exports with tariffs designed to offset the effect of China’s stockpiling of U.S. dollars to hold down the value of the yuan, also called the renminbi.
The closest any currency legislation has come to passage was last year, when the Democratic-controlled House of Representatives passed a bill, but the Senate took no action.
With Republicans now controlling the House and signaling they want to focus on other China trade issues, it is not clear Reid’s bid will succeed.
The yuan, which traded at around 6.4 per dollar on
Wednesday, has risen about 3 percent so far this year and 6.75 percent since its depegging by the Chinese government in June 2010.