US Experts Say Congress Passing China Currency Bill "Risky"
The US House of Representatives has passed legislation targeting China's currency policy, a step closer to punishing China for alledgedly manipulating its currency.
The House voted on a measure that targets imports from China and other countries where currencies that are perceived to be undervalued.
Both Democrats and Republicans endorsed the measure, a Washington rarity, a bipartisan vote on a substantive policy issue just weeks before key midterm elections.
However US experts say the move is more of a symbolic sense than one that may produce real results, they warn that the Congress could be on a risky path.
Our Washington correspondent Shanshan has more. The bill now need to be cleared by the Senate and then sent to the President to sign before it becomes law.
Nicolas Lardy, senior fellow with the Washington thinktank, Peterson Institute for International Economics, says whether the House proposal will receive a vote in the Senate is unclear at this stage.
"I think it's almost impossible for the Senate to take it up before the election. Senator Schumer has said he would like a vote on the Senate on the so-called 'lame duck' session. But they've got a very busy session when they come back, trying to deal with taxes and a number of other things. I think it's far from certain that the Senate will take that. "
If the bill becomes law, it will allow the U.S. Commerce Department to estimate how much China undervalues its currency to calculate and slap countervailing and anti-dumping duties on imports from China and other countries.
Former US trade representative Susan Schwab, a strategic advisor with Mayor Brown Law Firm made this asessment.
"There is nothing that happens after this piece of legislation goes through the House, even if it goes through the Senate, even if it goes into law, nothing happens immediately in terms of US action."
While some U.S. lawmakers extol the benefits of the bill, there is evidence that even if it became law, it will not help the US economy.
The Congressional Budget Office reported that the China currency bill may raise no more than $20 million a year in duties, a drop in the ocean compared with the more than $1 billion in daily imports from China reported in July.
To make use of the provision, a company would have to make a similar product in the U.S., and be able to show it is being harmed by the low-cost import from China. This may be hard to prove, as many goods are no longer made in the U.S..
Nicolas Lardy says the bill is not going to solve the issue, only to make the situation worse.
"So I think we would certainly be in a retaliation situation if this registration was passed by both Houses and signed by the President. This is a risky road. You start going down this risky road, and use this unprecedented approach in dealing with this issue, we may mind ourselves in hot water."
US Secretary of Commerce Gary Lock says, although there is frustration with the US-China trade issue, people have to look at the positive side.
"We have 35 years of economic ties, as those ties got more complex, we are gonna have disagreements. The thing is we have those mechanisms in which we can discuss and resolve those issues. So we need to use those mechanism to overcome difficulties, and move forward."
The White House has made no comment on the bill.
For CRI, I am Shan Shan in Washington.