CQ TODAY ONLINE NEWS
Sept. 30, 2011 – 8:53 p.m.
China Currency Vote Will Be Symbolic Only
By Joseph J. Schatz and Ben Weyl, CQ Staff
Senate critics of China’s currency policy are claiming strong bipartisan support heading into a Monday night test vote on legislation designed to put Beijing on notice.
Yet a successful vote is unlikely to result in any actual economic sanctions. Instead, it will serve as this year’s symbolic statement from Congress on an issue that resonates with many voters: the loss of domestic jobs to China’s expanding economy.
That is partly because top House Republicans have expressed no interest in bringing up the bill, even if it passes the Senate, despite a House vote just a year ago in favor of a less expansive currency bill.
Moreover, the Obama administration has not weighed in and would be unlikely to support the current Senate measure, given its potential for upsetting the highly interdependent economic relationship between the United States and China.
Still, a show of support for the Senate bill could strengthen the administration’s hand as it presses Beijing to loosen government controls over the Chinese currency, the yuan. Lael Brainard, the Treasury undersecretary for international affairs, visited Beijing on Sept. 30, in part to press China on currency issues.
Sen.
Schumer says he expects that at least 60 senators will vote for cloture to begin debate on the currency bill (
“The Chinese government should take note that this bill is on a fast track to passage in the Senate,” Schumer said in a Sept. 30 conference call.
The measure would threaten economic sanctions if the Treasury Department finds that a trading partner’s currency is “misaligned” based on a set of economic indicators.
Bill Likely to Founder Again
Last year, it looked like the time was right for Congress to confront China. In September 2010, the Democrat-controlled House passed a similar bill by a vote of 348-79. But no Senate vote followed, even though Senate Democrats had a commanding majority at the time and Schumer was again vocal about taking up a bill.
This year, the expected bulwark against the measure is the GOP-controlled House, where top Republicans are echoing concerns from the business community that enacting the measure could spark a trade war.
Republican leaders uniformly voted against the China measure last year, bucking the majority of their party, while Democrats voted 249-5 for the bill.
China Currency Vote Will Be Symbolic Only
Schumer argues that a strong Senate vote this time around would make it “hard for the House to block it.”
But an aide to House Majority Leader
With little risk that the bill will become law, that frees many senators to vote for the bill and against Beijing’s rising economic influence.
Democrats Tout Measure as Jobs Bill
Senate Democrats have touted the measure as an important part of their agenda to help create jobs, arguing that a change in Chinese currency practices would benefit U.S. businesses.
To bolster their effort, they’ve drawn on a recent report from the left-leaning Economic Policy Institute that concluded that the U.S.-China trade deficit has eliminated or displaced nearly 2.8 million American jobs since 2001, including 1.9 million manufacturing positions.
But the Obama administration has opposed similar bills in the past, as have previous administrations. While China’s economic policies regularly draw opposition from lawmakers, the executive branch has often moved to moderate any anti-Chinese sentiment, in part to protect the tricky relationship with the U.S. government’s largest foreign creditor.
While analysts agree that the yuan is distorting the trade relationship, the Chinese government contends that the United States’ longer-term shift from manufacturing to a service-oriented economy is the real driver of the trade deficit. And Beijing has made clear that it intends to release its grip on the yuan incrementally, in keeping with its style of state-controlled capitalism, and its own slow shift from being the world’s export machine to a more demand-focused economy.
While China is on track to become the world’s biggest economy in the coming decades, Chinese officials argue that the country is still a “developing” nation that needs to protect its own industries.
U.S. Business Wary
Much of the U.S. business community, with the exception of some small and medium-size exporters, opposes currency legislation; while they cite the value of the yuan as a problem, they worry that legislative action would spark a trade war.
A far bigger priority for these companies is to get Beijing to end policies that require foreign companies operating in China to hand over sensitive technology or favor Chinese companies in procurement bids.
Still, Schumer and Sen.
China Currency Vote Will Be Symbolic Only
Schumer said opponents of the legislation “represent large corporations, whose job is to help their shareholders, not to keep jobs in America.”
Schumer said Senate Majority Leader