China State Media Take Aim at U.S. Currency Legislation

China's official news agency derided on Sunday U.S. lawmakers' efforts to pressure Beijing over its currency policy as expedient and shallow, saying they were resorting to an old habit of deflecting blame on China.

This has become a common practice -- whenever the [U.S.] economy is slow, whenever an election is nearing, voices in the United States pressing for the rise of the renminbi are all over, Xinhua said in a commentary, referring to the yuan by its official name.

The remarks were published a day before the U.S. Senate decides whether to take up legislation that would allow companies to seek countervailing duties against countries with undervalued currencies, which could be considered unfair subsidies.

U.S. lawmakers contend China undervalues its currency by as much as 25 to 40 percent, giving Chinese products an unfair competitive advantage in global markets and resulting in millions of lost jobs.

Xinhua said in the commentary the only innovative element in the bill was to tie currency manipulation directly with trade subsidies and thereby make it easy for U.S. companies to wage a trade war against China.

Xinhua reiterated China's long-held stance that the exchange rate was not to blame for the trade imbalance between the two counties or unemployment in the United States.

The race for the U.S. presidential election has heightened, and the yuan exchange rate is now a target again, the Xinhua commentary asserted, concluding that the opinions of advocates of the yuan bill are expedient and shallow.

Beijing has repeatedly urged U.S. lawmakers not to politicize differences over China's exchange rate practices by passing the bill.

To become law, the bill would have to be passed by the Senate and the House of Representatives and then be signed by President Barack Obama.

The White House has said it is reviewing the proposed legislation, and Republican leaders in the House have not been eager to pursue a China currency bill, but many rank-and-file Republicans there are.

Amid the legislative move, the two countries continued diplomatic discussions over the issue. A top U.S. Treasury official traveled to Beijing late last week to discuss Beijing's currency policy.

In a statement, the U.S. Treasury Department said part of Under Secretary Lael Brainard's mission was to reiterate that while the renminbi has appreciated 10 percent adjusted for inflation since June 2010, the currency remains substantially undervalued, and more progress is needed.

Since the start of this year, China's central bank has set a string of record high yuan/dollar mid-points to guide the yuan's steady rise as it uses the exchange rate to help fight inflation and reduce the economy's reliance on exports.

But for September, the yuan weakened slightly. Despite the fall, the yuan has risen 3.19 percent against the dollar since the beginning of this year and 6.89 percent since it was unpegged from the dollar in June 2010.

(Reporting by Fang Yan and Ken Wills; Editing by Robert Birsel)

Reuters