Senators Introduce Bill To Force Obama Administration To Take Action Against China’s Currency Policy

The Wall Street Journal reports that a group of Senators, which includes Charles Schumer, Debbie Stabenow, Sherrod Brown, Lindsey Graham, and Sam Brownback, introduced a bill on Tuesday to force President Obama and his administration to take action against China for keeping the yuan at artificially low level.

The bipartisan group of Senators believes that China’s currency policy is one of the reasons behind global recession. The Senators also believe that China’s currency policy is affecting the chances of an economic recovery in U.S. "I believe the Chinese don't believe in free trade, I believe they are mercantilists," said Senator Charles Schumer.

The new bill would require U.S. Treasury and Commerce Department to take reciprocal actions against any country, which uses exchange-rate policy to unfairly support exports. However, the bill is mainly aimed at China and its exchange-rate policy.

Previously, the Bush Administration had unsuccessfully made efforts to stop China from unfairly using its exchange –rate policy to support exports. "If they're not going to do it, we're going to force them," said Senator Sam Brownback.

In the current framework, the administration deals with currency manipulation on case by case basis. The new bill, however, will set an “objective test” for countries and if any of them failed, the administration will be forced to take action against it, which includes lodging a complaint with WTO. However, the Obama administration will have to be cautious in how it deals with China as the country is U.S.'s largest creditor and trading partner.