BEIJING, Oct. 12 (Xinhua) -- China on Wednesday reiterated its firm opposition to a bill passed by the U.S. Senate targeting China's yuan policy, saying the move may trigger trade wars and hinder global economic recovery.
"China calls on the U.S. government, its congress and various communities to oppose the pressure put on the RMB exchange rate by domestic legislation and to tackle trade protectionism," Foreign Ministry spokesman Ma Zhaoxu said in a written statement on the ministry's website.
The remarks were made in response to the U.S. Senate's passing of the Currency Exchange Rate Oversight Reform Act on Tuesday. The bill is especially directed at China's currency, claiming China holds down the value of yuan to benefit its exports.
The bill comes ahead of the U.S. 2012 elections and at a time when the United States is suffering sluggish growth and persistent high unemployment, which have driven thousands of protesters to the streets of New York and dozens of other cities.
With the stated goals of reducing the trade imbalance between the two countries and creating more domestic jobs, the bill would make it easier for the U.S. government to designate China as a "currency manipulator" and slap retaliatory tariffs on goods imported from China.
But it is doubtful whether the bill will become a law, as it would have to clear the House of Representatives and then be signed by President Barack Obama before becoming law. Both Obama and House Speaker John Boehner have expressed reservations regarding the legislation.
According to Ma, the U.S. Senate bill is essentially practicing trade protectionism by making an accusation of currency manipulation, which is a serious violation of the rules of the World Trade Organization.
The Ministry of Commerce and the People's Bank of China, or the central bank, also joined the condemnation Wednesday, noting that the bill will severely impair Sino-U.S. trade ties and damage the global economy.
The move has seriously violated international regulations and sent the wrong signal in escalating trade protectionism, said Shen Danyang, spokesman of the commerce ministry.
The central bank reaffirmed that China's reform of yuan exchange rate formation mechanism has achieved pronounced progress in recent years and the yuan's value is approaching a reasonable and balance level.
China will continue "reform of the exchange rate formation mechanism and increase the flexibility of the yuan exchange rate," it added.
U.S. lawmakers have, for years, pressured China for a rapid appreciation of its yuan, as they argued China is creating a trade imbalance and stealing jobs of American people by undervaluing its yuan to make its exports cheaper.
China has repeatedly explained that the nation is not seeking a trade surplus, and the yuan policy is not the cause of Sino-U.S. trade gap, and letting the yuan rise is not a solution to the imbalance.
The government has been committed to gradual currency reform. Official data showed that China's yuan has appreciated more than 30 percent against the dollar since 2005 when a dollar peg was scrapped.
During the same period, the unemployment rate in the U.S. rose from 7 percent to 9 percent. The trade deficit of the country declined to 363 billion U.S. dollars in 2009 from 655 billion U.S. dollars in 2007, while 6 million more Americans were unemployed.
However, the repetitive statements and hard facts failed to silence criticism from the U.S. lawmakers.
U.S. politicians "attributed sluggish domestic economy and lingering high unemployment to trade imbalance and then linked the problem to China's exchange rate in hope of easing domestic tension and improving its economy," said He Weiwen, director at the Study Center for China-U.S./E.U. of China Association of International Trade.
"It is just a trick that U.S. politicians currently play over and over again," he said.
Since the outbreak of the 2008 crisis, Washington has carried out a massive bailout and two rounds of quantitative easing (QE) policies to shore up its economy. But still the banks are reluctant to lend money and employers are unwilling to create jobs. Moreover, the pile-up of debt has ignited risks of default.
"The bill is not a solution to the trade imbalance and high unemployment rate; on the contrary, it will jeopardize economic interests for both side," said Zhang Yansheng, director of the Research Institute of Foreign Economic Relations of the National Development and Reform Commission, China's top economic planning agency.
Chinese experts believe pressuring China for a large appreciation in the yuan and imposing tariffs by the U.S. will probably cause wars in the sectors of exchange rate and trade, which may dent China's exports and in turn slow the country's economic growth and even the global recovery.
"Currently economies in the U.S. and Europe are faltering and need emerging nations like China to create demand to help them through the difficulties," Zhang said.
If China's economy has problems, their economic recovery will be dampened and the world economy will retreat into a bigger recession, he said.
Zhang Ming, international finance researcher of the Chinese Academy of Social Sciences, said the global economy is standing at a crucial stage of recovery where collaboration to maintain the stability of international monetary and trade environment is needed.
Any move to stifle the development of other countries will make world depression repeat itself, he added.
Shen Danyang said China believes the two countries should promote bilateral trade cooperation through dialogue and positive measures. China is not willing to see Sino-U.S. trade relations be severely hurt after the bill becomes law.