China welcomes US senators dropping yuan bill

HONG KONG, Sep 29: China today welcomed the decision by two U S Senators to abandon a controversial bill that threatened to impose a hefty tariff on China's US-bound exports unless Beijing boosted the value of its currency.

''It is our hope that the problems that are occuring during the course of Sino-U S economic and trade development can be well settled visa dialogue and intensified cooperation, therefore we welcome the dropping of the bill by the two senators,'' Gao Hucheng, China's Vice Commerce Minister, told reporters in Hong Kong today.

The Graham-Schumer bill, which was strongly opposed by the Bush administration and most business groups, threatened a 27.5 percent tariff on exports to the United States if Beijing failed to significantly raise the value of the yuan within six months.

The original bill was motivated by a widespread U S view that China's currency is undervalued by 15 to 40 percent, giving Chinese companies an unfair advantage by effectively subsidising their exports and taxing imports from the United States.

Sen Charles Schumer, a New York Democrat, and Sen. Lindsey Graham, a South Carolina Republican, said on Thursday they had accomplished their goal of focusing more attention on China's strict exchange rate controls, which they believe gives Chinese companies an unfair trade advantage.

The two senators, along with the Senate Finance Committee Chairman Charles Grassley, and Sen. Max Baucus, a Montana Democrat, said they would develop a new, non-China specific bill next year considering how the United States should respond to countries that do not fairly value their currency.

REUTERS