China Warns of Trade War Over U.S. Yuan Legislation

(Newsroom America) -- China on Tuesday warned the U.S. a trade war could ensue if a bill aimed at forcing Beijing to let its currency rise passes.

The Senate on Monday voted to begin a week's worth of debate over the legislation, leading China's central bank and ministries of commerce and foreign affairs to accuse Washington of "politicizing" currency issues and putting the global economy at further risk.

China reacted similarly last year with the House passed a currency bill that did not make it out of that chamber.

But Tuesday's warning led analysts to believe China is taking the latest legislation 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," Wang Zihong, a researcher at the China Academy of Social Sciences, a top government think tank, told Reuters.

"The strong responses made by the Chinese government may also suggest that the possibility would be quite high this time that the United States will pass the final bill in the end and that Beijing is worried about the possible negative impact on China's exports resulting from the legislation," Wang added.

One Chinese official urged U.S. lawmakers to proceed on the measure from the standpoint of "the broader picture of Sino-U.S. trade and economic cooperation."

Foreign ministry spokesman Ma Zhaoxu, in comments posted on China's official government Web site, also urged lawmakers to "forsake protectionism," adding that "China expresses its adamant opposition" to the bill.

China has emerged as the world's fastest growing economy and is number two globally, overtaking Japan last year but still far behind the United States' $14 trillion annual GDP.

© 2011 Newsroom America.

Contact Jon E. Dougherty

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