Tuesday, October 4, 2011

China warns of trade war if U.S. bill passes

An angry China warned Washington on Tuesday that passage of a bill aimed at forcing Beijing to let its currency rise could lead to a trade war between the world's top two economies.

China's central bank and the ministries of commerce and foreign affairs accused Washington of "politicising" currency issues and putting the global economy at risk after U.S. senators voted on Monday to start a week of debate on the bill.

The response suggested China sees a greater risk from the proposed bill than it has in the past when U.S. lawmakers attempted to put forward similar legislation to speed up the pace of appreciation in the yuan, or renminbi.

Beijing made similar remarks last year after the House of Representatives passed a currency bill that later failed to make any further progress in Congress.

Tuesday's coordinated salvo and the central bank's warning of a trade war and a slowdown in China's exchange rate reforms indicated Beijing was taking the latest currency bill more seriously.

"It is very rare for three different ministries of the country to refute something so quickly and strongly, showing how deeply the Chinese government is concerned about the yuan bill," said Wang Zihong, a researcher at the China Academy of Social Sciences, a top government think tank. more