China wary of proposed US bill to punish low currencies

China is clearly troubled by the proposed US law that will punish countries with artificially low currencies.  Just how worried?  Well that the Foreign Ministry, the Commerce Ministry and Chinese central bank all issued statements denouncing it.  All three said there would be serious repurcussions for the world's two biggest economies if the American legislation passes. 

The criticism comes after US senators voted Monday to open a week of debate on the bill that would allow the government to impose additional duties on products from countries that subsidize exports by undervaluing their currencies.

The US legislation faces considerable hurdles before it becomes law. The Obama White House, while agreeing that China's currency, the yuan, is undervalued, has been wary of unilateral sanctions against Beijing.

Chinese Foreign Ministry spokesman Ma Zhaoxu said the Senate move "seriously violated WTO rules and seriously disturbed China-US trade and economic relations." 

"The Chinese side appeals to the US side to abandon protectionism and not to politicize trade and economic issues, so as to create a favorable environment for the development of China-U.S. economic and trade ties," Ma said.

If the bill passes, it "cannot resolve insufficient saving, the high trade deficit and the high unemployment rate in the US, and it may seriously affect the progress of China's exchange rate reform and may lead to a trade war, which we do not want to see," the bank said.

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