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China-Based Firms Fear Currency Bill Could Hurt Business Opportunities
Date: 9/29/2010
Written By: Inside US-China Trade

Excerpt: Currency legislation likely to be approved by the House today (Sept. 29) will actually make it less likely that China speedily revalues the renminbi (RMB) and could result in Chinese government actions that make it harder for U.S. companies to export to China or expand their operations there, according to a delegation of trade associations representing companies operating in China. The United States instead should pursue policies that can help U.S. exports compete more effectively with German, Japanese, South Korean and Canadian products for sale in China, said the leaders of the American Chambers of Commerce in Shanghai and Beijing (see separate story). In a Sept. 27 lunch with reporters, delegation members warned that passage of H.R. 2378, the Currency Reform for Fair Trade Act, as approved by the Ways and Means Committee last week, may make Chinese-based companies less likely to source from the United States because of uncertainty over possible Chinese retaliatory measures... But William Reinsch, the president of the National Foreign Trade Council (NFTC), which sponsored lunch for the visiting delegation, said he would expect "some sort of reaction" from China against the Levin bill "whether there's merit or not." In contrast with Japan's muted responses to currency-related pressure by the U.S. in the 1980s, China today has been "much more up front" about engaging in "tit for tat" retaliation against perceived U.S. trade slights, he said. This more aggressive reaction does not mean the U.S. should not act if it believes it is necessary, he said. But it does mean that the U.S. government should anticipate that China may react and should "take that into account in our planning and our timing, so that we are at least prepared when those things come along."