The US House of Representatives last week passed a bill giving the executive branch the power to impose punitive duties on exports to the US of any country whose currency is labelled “fundamentally undervalued.” The measure was pushed by the Democratic leadership and supported overwhelmingly by Democratic congressmen, with substantial Republican support, according to the Centre for Research for Globalisation.
The vote was 348 to 79, with 99 Republicans joining 249 Democrats voting in favor, and 74 Republicans voting “no” alongside five Democrats.
The bill was openly directed against China, which has come under mounting pressure from the Obama administration to more rapidly raise the exchange rate of its currency, the Renminbi, so as to make Chinese exports to the US more expensive and US exports to China cheaper.
The White House has not taken a position on the House bill, whose prospects for passage by the Senate after the November midterm elections are uncertain, but Obama and Treasury Secretary Timothy Geithner gave a tacit go-ahead for Democratic House leaders to push the measure.
Testifying before Congress on September 16, Geithner declared the Renminbi to be undervalued and demanded that the Chinese move more rapidly to increase its exchange rate. He indicated that if China refused to revalue its currency far more than its 2% increase since June, the US would take measures to restrict China's access to American markets. – Source: Centre for Research on Globalisation