A day after the US Senate passed legislation to punish China for its alleged currency manipulation, House leaders signalled they would block the bill to prevent a "trade war." "Given the volatility in the world markets, given the uncertainty about the world economy, for the Congress of the United States to be taking this step at this moment in time poses a very severe risk of a trade war," Republican House Speaker John Boehner said Wednesday.
His comments came as he faced mounting pressure to bring up the bill in the House of Representatives, where enough of his fellow Republicans have joined Democrats in backing the proposal that it would likely pass. The bill, powered by a tide of US voter frustration at a sour economy and high unemployment ahead of November 2012 elections, envisions retaliatory duties on Chinese exports if the value of the yuan is unfairly "misaligned."
Beijing has denounced it as "a ticking time-bomb" that threatens to blow up economic ties between the economic superpowers, parts of the US business community opposed it, and the White House has criticised it. The speaker said he was "concerned" about China's currency policy but said those worries were outweighed by "grave concerns" that the measure could trigger a costly feud between the two economic superpowers.
In an apparent bid to shift the volatile issue to the White House, Boehner pushed President Barack Obama to take a formal position on the legislation, as he accused the president of being "out campaigning instead of governing." Obama spokesman Jay Carney said the White House was working with key lawmakers to address "concerns" about whether the bill could fall afoul of Washington's international trade obligations.
"If this legislation were to advance we would expect those concerns to be addressed," Carney said. But "we share the goal of the legislation in taking action to ensure that our workers and companies have a more level playing field with China." Later, the House of Representatives voted against attaching the bill to legislation to enact the long-stalled US free trade deal with Colombia in a symbolic vote conceived by Democrats to embarrass Republicans.
Just four Republicans joined 188 Democrats in voting yes, while 235 Republicans and one Democrat rallied to beat back the proposal by a 192-236 margin that does not preclude future action on the bill - or future political headaches. In contrast to House Republicans' caution on the issue, former Massachusetts governor Mitt Romney, a Republican White House front-runner, has staked out a tough position on what he has called China's "cheating," vowing to brand Beijing a currency manipulator on his first day in office. Obama, his re-election bid weighed down by the sagging US economy and 9.1 percent unemployment, is caught between wanting to look tough on China and hoping to avert a trade war that could makes things worse.
"He's in a bit of an awkward position," said Democratic Senate Budget Committee Chairman Kent Conrad, who told AFP the president's approach would give US negotiators more leverage in talks with Beijing. Many in Washington agree that China keeps the yuan unfairly low against the dollar, giving its goods an edge of as much as 30 percent over similar US products, widening the trade deficit and costing American jobs. But the measure's opponents, stressing the bill's toll on China ties, also warn that a rise in the yuan would boost manufacturing and jobs in countries such as Vietnam or Malaysia - and not in the United States.