U.S. lawmakers make China a whipping boy

WASHINGTON - U.S. lawmakers, divided sharply on most big issues, are finding common ground by attacking a familiar foe: China.

On one end of the Capitol Tuesday, senators were considering legislation to punish China for currency manipulation. On the other, members of the House of Representatives accused the Obama administration of not doing enough to support China's nearby military rival, Taiwan.

Meanwhile, the powerful chairman of the House of Representatives intelligence committee accused China of waging an unprecedented campaign of cyber espionage aimed at stealing some of the most important U.S. industrial secrets.

As China has emerged as the world's second largest economy and military power, it is has become an increasingly familiar target of criticism in Congress on human rights, economic policies or its perceived threat to U.S. national security.

As the U.S. heads into an election year, Republicans and Democrats alike are pressuring the administration to get tougher on Beijing.

In a move that China's Foreign Ministry warned could seriously disturb trade and economic relations with the U.S., the Senate on Monday voted 79-19 to advance legislation that would make it easier to impose trade penalties against China for manipulating the value of its currency.

Lawmakers accuse Beijing of undervaluing the yuan currency against the dollar by up to 40 percent to make Chinese goods cheaper and American exports more expensive, both of which hurt U.S. producers and consumers.

That is an old complaint, but one with growing resonance as lawmakers vie for re-election in November 2012, with America's economic recovery faltering and unemployment stubbornly high.

"Here in the Senate we have heard the message loud and clear," said Senate Majority Leader Harry Reid, a Democrat. "We can't ignore blatant, unfair trade practices that put American workers at a disadvantage."

According to some estimates, forcing China to realign its currency could support 1.6 million American jobs. Others dispute that and say legislation, which lawmakers have been pushing for the past six years, could set off a trade war that would hurt the U.S. economy.

The administration has said it is reviewing the legislation, but it has preferred persuasion over unilateral action against China, the main foreign creditor of the U.S. government. The administration has said its approach has paid dividends as the yuan has appreciated 10 percent adjusted for inflation since June 2010.

It appears to have support on the issue from an unlikely quarter, the pro-business Republican speaker of the House, John Boehner. He said Tuesday it was "pretty dangerous" for Congress to tell another country how to run its monetary policy.

That could make it difficult for the bill to be taken up on the floor of the House, even if the Senate should pass the bill with support from both Democrats and Republicans.

Taiwan also is a touchstone issue for Congress. There is strong bipartisan support for sales of new F-16 warplanes to the self-governing island; that also would benefit the defense industry and could generate thousands of American jobs.

China warns U.S. against $5.8B Taiwan arms deal

Selling the planes also is seen as a test of America's standing in the world, a measure of its ability and willingness to confront a rising China in the Asia-Pacific region where the U.S. military has been the predominant force since World War II.

Lawmakers have criticized the Obama administration for deciding only to refurbish Taiwan's existing fleet of F-16s rather than to sell it new planes. That decision was viewed widely as a tactic to avoid annoying China, which regards Taiwan as part of its territory.

Rep. Ileana Ros-Lehtinen, chairwoman of the House Foreign Affairs Committee on said Tuesday the U.S. appeared timid in the face of China, which she described as "on the march in Asia." That committee's ranking Democrat, Rep. Howard Berman, also said Taiwan still needed the new planes to defend itself.

The administration won few friends in Congress with its protracted and secretive deliberations on the arms sales, before it announced a $5.8 billion package last month.

But as on the currency issue, legislation demanding sales of new F-16s to Taiwan may struggle to win Congressional approval.

While a bill could win passage in the Republican-controlled House, similar legislation already has been blocked in the Democratic-controlled Senate.

In another expression of deep-seated suspicion of Beijing's intentions toward the U.S., Rep. Mike Rogers, Republican chairman of the House intelligence committee, said Chinese efforts to steal U.S. technology via the Internet have reached what he called an "intolerable level."

He said there is little doubt among cyber security specialists that the Chinese government is behind much of what he called cyber "piracy" and urged the United States and its allies to pressure Beijing to stop.

[bruce789]

Foreign trade imbalance including China and Japan is like a half trillion stimulus, 50 billion/month, and that's every year. I don't think you can stop American companies from using foreign labor in this scenario, they can't compete otherwise, has to be a direct counter measure in the trade policy.

[LtSmily]

This is not economics, it's politics. Anyone notice how gas just started "dropping" with no apparent reason. Production is not up. Supply hasn't increased or decreased. Winter blends are sometimes an excuse because there are less of them to refine, but overall, no new news on why it has dropped so far. The administration (and Congress)is doing what every administration for the past 20 years has done, they are dangling a carrot out through back channels for China to take some heat because it's election season. The current administration needs populist support. The wall they are running into is trillions in spending that China is not willing to negotiate on. A trade war would be devastating to still ailing U.S. economy, and that doesn't bode well for re-election chances. Obama is in a very hard spot, but it's a spot created and supported by progressive monetary policy. Looks like the 2012 election will be voting for the lesser of 2 evils again. Crap.

[RealiteBites]

Uh, no - it's economics. You've just been sippin' the coolaid about "free trade".

Do you even know that trade deficits are a component of GDP??

[RealiteBites]

And that bit about 'trade wars' is just basic math ... the person that's exporting more than they're importing has more to lose; the person with the trade deficit has all the power.

China can't retaliate by ditching US bonds because that would cause their currency to rise, which is exactly waht they've been trying to avoid.

Barack's a wimp - he should have been able to get results a lot sooner ...

[Galactus9]

The news reported that 90 percent of the software used by the government in China is pirated. The fact is that China steals American property and controls their currency. Who cares how many dollars they hold. It would be nice to see them spend all of it and create jobs in the US instead of hoarding their dollars in T bills.

[RealiteBites]

Take the personal 'whipping boy' out of the equation and try to stick to the economics.

Free trade presupposes a lot of things, including free floating currency. It also presupposes TRADE!!!!!!

This is basic, Econ 101 trade theory ... comparative advantage. Just goes to show you how useless college is for 99.99% of the population who think the little caveman hypothetical was about growing apples and oranges.

The scary part is that some of those chumps go on to get PhD's and get jobs in the Obama Administration. I think Romney's a lot more intellectual ... it should be interesting to see how he deals with misapplied trade theory if he gets the nomination (and then becomes President) ...

[PLAjiang]

everyone know china is innocent,what they want just is plunder their interests

[baf827]

First the BOUGHT AND PAID FOR CONGRESS borrows BILLIONS from china now they poke the big china bear with a stick, dissing them! Think they are IDIOTS too but also looks like many of them are menrtally unbalanced also.

[freeamerica31]

I hope they keep poking before it's too late.

[antoniof123]

Boy the politicians are getting dumber by the minute way to go America keep sending these morons back.

[freeamerica31]

You would rather keep letting China undermine our economy further and take more jobs while supplying the technology to us that was devoloped in this country?