U.S. senators threaten currency bill ahead of Hu visit

[David Guyatt]

Interesting idea. What are the senators proposing... sending a strongly worded letter to China by camel saying we don't love you anymore - but please keep buying our T bills and bonds (cuz we'll go bankrupt if you don't)?

http://uk.news.yahoo.com/22/20110117/tts...02f96.html

U.S. senators threaten currency bill ahead of Hu visit

A group of U.S. senators, on the eve of Chinese President Hu Jintao's arrival in the United States, said the time has come for U.S. congressional action on China's currency policies. Skip related content

"There's no bigger step we can take to preserve the American dream and promote job creation, particularly in the manufacturing sector ... than to confront China's manipulation of its currency," Democratic Senator Charles Schumer said.

The message to Hu is "we are fed up with your government's intransigence on currency manipulation. If you refuse to play by the same rules, we will force you to do so," Schumer said in a conference call with reporters.

Beijing's currency practices give Chinese companies an unfair price advantage in trade and have acted like "a boot on the throat" of U.S. economic recovery, Schumer said.

Hu arrives in Washington Tuesday for a state visit with President Barack Obama and also is expected to meet with senior members of Congress. Schumer and many other lawmakers have complained for years about China's currency practices.

In a rare written interview published Sunday by the Wall Street Journal and the Washington Post, Hu said China had taken steps towards a more flexible exchange rate policy.

But he appeared to reject a U.S. argument that Beijing let its currency appreciate faster to help rein in domestic inflationary pressure.

China is the world's biggest foreign holder of U.S. government debt, with a third of its $2.85 trillion in foreign exchange reserves invested in U.S. Treasuries.

Schumer and said he and a group of bipartisan senators would reintroduce a bill they crafted last year, but which never came to a vote in Senate.

It would require the Treasury Department to investigate "China's manipulation of its currency and actually do something about it ... The time for talk is over. We've had enough of China's empty verbiage," he said.