Us May Consider Bills For China's Exchange Rate

Democratic Senator Charles Schume, who joined several bipartisan members 9 days ago, said that in the next two weeks, the Senate will vote on a bill on China's exchange rate policy to further strengthen the appreciation of the renminbi.

Schumer said he would add the terms of the renminbi exchange rate as an amendment to President Obama's proposal to increase small business credit.

Schumer, Democratic Senator Debbie Stabeno of Michigan, Republican Senator Lindsay Graham of South Carolina, and Democratic Senator Sherrod Brown of Ohio are the main supporters of this proposal. Analysts believe that Schumer's move is aimed at putting pressure on the Chinese government again before the summit of the group of twenty in June 26th.

Since the debt crisis broke out in Europe, the exchange rate of the euro has dropped sharply, so the effective exchange rate of RMB has risen sharply recently. Many economists also believe that in the case of debt crisis in Europe, the stability of the RMB exchange rate against the US dollar has also played a stabilizing role in the global financial market, and has become a firewall to stop the spread of financial risks. Market expectations for RMB appreciation in the near future also declined.

This year, the US Congress has constantly put pressure on the government on the issue of RMB exchange rate. In mid March, 130 members jointly wrote to US Treasury Secretary Geithner and Commerce Minister Luo Jiahui, calling for the definition of China as the so-called "currency manipulator". In March 16th, Schumer put forward the 2010 schumper - Graham - currency exchange rate regulation reform bill, calling for the US government to consider exchange rate manipulation as a subsidy. However, Geithner announced on April 3rd that the government postponed the publication of the international trade and exchange rate policy report of major trade partners originally scheduled for April 15th.

Analysts pointed out that the US Congress will hold mid-term elections this year, so many congressmen politicized the RMB issue to win votes. But in fact, the issue of RMB exchange rate is not the root cause of Sino US trade imbalance. Once China and the United States break out on this issue, the outcome will inevitably be two losers.