The US Senate is reportedly planning a bill to punish China over alleged currency manipulation, in order to compensate US losses caused by trade deficit.
However expert said it is unfair to call China a currency manipulator and bilateral trade imbalances could by no means be solved through yuan appreciation.
"The yuan has appreciated against both the US dollar and euro recently, and with the high domestic inflation, China would have devalued its currency if it was a currency manipulator," Luo Yuding, deputy dean of College of Business at Shanghai University of Finance and Economics, told the Global Times on Tuesday.
On Monday, the central parity rate of the yuan against the dollar jumped to a new record high of 6.3735. The yuan has appreciated over 6 percent against the euro since the beginning of September.
The US Senate bill was unveiled last week in the backdrop of the US unemployment rate topping 9 percent and the race to the November 2012 elections heating up. Democratic Majority Leader Harry Reid told the AFP that the bill is bipartisan and he is confident that it will finally pass.
"To label China as a currency manipulator could harm the bilateral trade," said Luo. "And it is not necessarily beneficial to the US, as most of the goods China exports are no longer produced in the US, and any retaliatory measures could only benefit other exporting countries instead of US manufacturers."
Zhou Xiaochuan, governor of China's central bank, said at a recent IMF meeting that the "yuan exchange rate is decided by market conditions, and the central bank will not intervene barring extreme external conditions."
Reid said that the chamber will "start the work on trade matters" next week, including the legislation on China's currency, but it was unclear when the bill would come to a final vote.
And the bill has not gained enough domestic support. The White House opposes it, and Republican leaders in the House of Representatives have no plans to bring similar measures to vote in that chamber, AFP reported, citing a leadership aide.
A cluster of 51 US industry groups this week stepped up efforts to block such legislation, warning in a letter to senators that it could spark a "counterproductive" trade war.
"To name China a currency manipulator will not alleviate the unemployment problem in the US, and it will increase the cost of living, since a large part of goods of daily necessities in the US are imported from China," noted Luo.
AFP contributed to the story
From：Global Times | September 28, 2011