WASHINGTON, Mar. 17 -- Under the pressure of the election year and high unemployment, some U.S. senators proposed legislation on Tuesday to press China to appreciate its currency.
Five senators introduced the Schumer-Stabenow-Graham Currency Exchange Rate Oversight Act of 2010 at a press conference at the Capitol Hill.
Democratic Senator Chuck Schumer said that China's currency renminbi is undervalued and he has kept pushing the U.S. government to press China to strengthen its currency.
The Schumer bill requires the U.S. Treasury Department to identify countries with "fundamentally misaligned currencies" and asked the Commerce Department to investigate currency undervaluation as a "countervailable subsidy."
The United States recently ratched up pressure on China to realign its currency. On Monday, 130 U.S. congressmen wrote to the government, demanding the Obama administration take actions to appreciate yuan against the dollar.
China has dismissed calls for revaluation of its currency. The country's managed floating exchange rate system, in place since July 2005, is market-based, said Chinese Commerce Ministry spokesman Yao Jian on Tuesday.
"It would be unfounded and meaningless for some people in the United States to back their calls (for China to be labeled a currency manipulator) by citing China's trade surplus and U.S. deficit and the U.S. recovery needs," Yao said.
U.S. unemployment, currently at 9.7 percent, is not expected to fall significantly this year when the Congress is facing election in November. Job creation has become a top priority of the U.S. government.
"The United States ... cannot ask others to (raise) their currency for the sake of its own export expansion -- that would be an egotistical practice," the spokesman added.
"Politicizing the exchange rate issue will not be conducive to coordinated world efforts in tackling the crisis," he said, adding that China hoped Washington would be "an advocate of free trade, not an obstructor."
The remarks echoed comments by Chinese Premier Wen Jiabao on Sunday. "I do not think the renminbi is undervalued," Wen said. "We are opposed to countries pointing fingers at each other or taking strong measures to force other countries to appreciate their currencies."
"I understand that some countries want to increase their exports, but I don't understand the practice of depreciating their currency and forcing others to appreciate theirs in order to accomplish this," Wen said. "I think this is a type of trade protectionism."
The tensions against Chinese yuan came one month before the U.S. Treasury Department is to decide again whether to label China as a currency manipulator in a semiannual report to the Congress.
President Barack Obama urged China last Thursday to adopt a more market-oriented exchange rate, or to allow the yuan to be strengthened.
Under mounting pressures to address domestic economic woes, Obama proposed a plan in his State of the Union Address in January to double the U.S. export in five years, with a goal to create 2 million jobs.
Many experts are skeptical of the workability of the plan. But they do believe a strengthened renminbi may reduce the pressure on Obama and make his plan more achievable.
But foreign pressure on China to appreciate the yuan is counterproductive and is doomed to fail, former European Commission President Romano Prodi said on Monday.
"The higher the rank of a politician who declares China must revalue the renminbi, the longer the delay will be in the possible revaluation," Prodi told a European Union Chamber of Commerce lunch.