WASHINGTON – At least 67 senators have signed on to a bill to hit China with tariffs of 27.5% on all imports at the end of this year unless China revalues its currency within the next six months.
The legislation, sponsored by Senator Charles Schumer (D-NY), poses a harsh and controversial reply to China’s recent economic gains – many of which, critics say, have come at the expense of the U.S. manufacturers.
Like many Asian nations, China has focused on an import strategy to bolster its economy. And it has worked. Exports make up 36% of its economy, helping it to an average annual growth rate of 9% over the past decade. Moreover, exports are still growing – at an annual clip of 30%.
Behind the Schumer bill is a push to get China to revalue its currency, the yuan. China pegs the yuan to the U.S. dollar at a fairly constant rate of 8.28:$1. Last week, the U.S. Treasury Department told Congress that "the fixed exchange rate that China maintains is a substantial distortion to world markets, blocking the price mechanism, and impeding adjustment of international balance".
The proposed Senate measure, and several others also under consideration in Congress, pose a variety of stipulations, but some analysts say that getting China to comply will depend on back-channel efforts, not saber-rattling. They say that China’s national pride and image will not allow the Asian nation to back down in the face of foreigners’ attempts to dictate economic policy.
