China is warning of serious disruptions in U.S.-China trade ties if the U.S. Senate goes ahead with a measure to punish Beijing for undervaluing its currency.
Senate members voted late Monday to proceed with the bill, setting the stage for several days of debate before it comes to a vote. If the bill becomes law, the United States could impose retaliatory tariffs on any country that deliberately keeps the value of its currency artificially low.
Chinese officials denounced the bill Tuesday, saying the United States is using the currency issue as an excuse for protectionist trade measures. In a posting on the government website, foreign ministry spokesman Ma Zhaoxu said the bill "gravely" violates World Trade Organization rules and would seriously upset trade and economic relations between the two nations.
The bill has supporters in both U.S. political parties, but still faces considerable hurdles. Even if it is approved by the Senate, it must also pass in the U.S. House, where Republican leaders have shown little interest in bringing it to a vote. Finally, it can be vetoed by President Barack Obama.
While the White House agrees that China's yuan is undervalued, it has decided not to formally designate China as a currency manipulator.
The Senate bill does not specifically mention China, but lays out a procedure for imposing tariffs on any country with a devalued currency.
The measure builds on growing U.S. anger about China's currency policy. U.S. officials have long complained that China intentionally maintains an undervalued yuan as part of a strategy to benefit domestic exports and put foreign imports at a disadvantage.