Two US senators decided on Friday to drop their controversial bill to impose
tariffs on Chinese imports.
Senators Charles Schumer and Lindsey Graham agreed to drop their legislation
threatening to levy tariffs on imports from China if Beijing refused to raise
the value of its currency, which they claimed is "artificially depressed" to
make Chinese products cheap on world markets.
But they said they would work on a new measure next year to prod China on the
currency issue.
The two lawmakers had sought a quick vote on their legislation, but they
changed their tune after a meeting with US Treasury Secretary Henry Paulson, who
urged them to delay a vote on the bill.
"It's a win for the secretary of the treasury," Nicholas Lardy, a fellow at
the Institute for International Economics in Washington and an expert on China,
was quoted by Bloomberg as saying.
Lardy also said that the Chinese Government understood that Schumer's bill,
which would have imposed tariffs of 27.5 per cent on Chinese imports, would
never become law.
"Such a bill, if passed, would result in a lose-lose situation for China and
the United States," said Han Meng, an economist at the Chinese Academy of Social
Sciences.
Strong opposition to the bill from US business circles was clear evidence
that the proposal was not in the interests of the United States, said Han.
Citigroup Inc and General Electric Co had urged the two senators to drop the
bill, which was also opposed by the Bush administration.
"The dropping of the bill is a welcome and pragmatic move," said Han.
Both Schumer and Graham acknowledged that their bill was unlikely to become
law because the House of Representatives is not considering such legislation.
China's currency, the renminbi, has appreciated almost 5 per cent since its
revaluation last July, when China ended its decade-long direct peg to the US
dollar and switched to a managed floating exchange rate regime. Its daily
benchmark, or the central parity rate for the US dollar, was 7.9087 yuan on
Friday.
