Key Senate committee to draft China currency bill

The US Senate Finance Committee will begin drafting legislation on Thursday that is intended to boost pressure on China to let its currency rise in value, a committee aide said on Tuesday.
The proposals the committee aims to turn into legislation were unveiled last month by four US senators who acted after the US Treasury Department declined to name China a currency manipulator in a semi-annual report on currency practices of key trade partners.
Many lawmakers and US producers claim that China has an unfair price advantage resulting from Beijing's practice of managing the yuan's value to keep its products relatively cheap in US consumer markets.
The proposals drafted by Senate Finance Committee Chairman Max Baucus, a Montana Democrat, and three other senators, include allowing currency intervention by the Federal Reserve and other central banks to affect the Chinese yuan's value, as well as potentially allowing US companies to seek anti-dumping duties on Chinese imports.
US manufacturers claim the yuan is undervalued by 25 percent to 40 percent, giving Chinese-made consumer goods a price advantage that makes it impossible to compete. They also say the advantage has cost millions of lost US jobs.
The other senators drafting the proposals were Sen. Charles Grassley, an Iowa Republican; Sen. Charles Schumer, a New York Democrat, and Sen. Lindsey Graham, a South Carolina Republican.
The Senate Banking Committee also is expected to approve legislation by the end of the month that would make it harder for Treasury to avoid labelling China as a currency manipulator and strengthen its tools for dealing with the issue.
The House of Representatives Ways and Means Committee is expected to hold a hearing next week on possible China legislation in anticipation of possible action after the August congressional recess. Deputy US Trade Representative Karan Bhatia, in a speech on Tuesday to a US trade association, said the Bush administration's "core concerns" about any currency or China-related legislation were that it not violate World Trade Organisation rules or jeopardise US efforts to expand trade.
"The administration has worked steadily to maintain a trade policy focused on ensuring that China remains an engine of economic growth for the United States and a responsible trading partner to the world," Bhatia said.