US currency bill would see ‘retaliation’

China’s government will not sit by and will retaliate in kind against the United States if a measure targeting the yuan becomes law, said the Ministry of Commerce on Monday.

“The currency legislation proposed by the US would hurt the interests of both China and the US. We are strongly against it,” said He Ning, director-general of the Department of American & Oceanian Affairs with the Ministry of Commerce.

“We have readied ourselves with measures to deal with the possible outcome from the US”, He said.

He’s remarks came as Chinese President Hu Jintao is expected to attend the G20 summit on Nov 3 and 4 in Cannes, France. At that meeting, leaders from the 20 nations are scheduled to discuss how to address issues including the global economic recession and the spreading European debt crisis.

“I am not sure whether the Chinese currency thing will be talked about or not” during the G20 meeting, He said.

But officials from the European Union said last weekend that they will pressure China on yuan appreciation during the Cannes discussions.

Earlier October, the US Senate passed legislation that would allow the US government to impose tariffs on Chinese goods to compensate for an allegedly undervalued currency.

The proposal will have to be approved by the House of Representatives and then signed by US President Barack Obama before it can become law.

“Nations worldwide always like to target China and its policies, including its currency, when they have their own problems,” said He.

The US unemployment rate has remained above 9 percent since April, although the country’s economic growth returned to 2.5 percent in the third quarter, easing fears that the US economy was falling into another recession. Economists have warned that the US recovery is still precarious.

Experts said the US is transferring its own economic problems to China by pointing to the nation’s currency policies, especially as the 2012 US presidential election draws near.

China’s yuan has so far appreciated 3.7 percent this year, and the nation continues to require efforts aimed at reducing inflation, Vice-Minister of Finance Zhu Guangyao said at a conference on Friday.

Zhou Xiaoyan, director of the Bureau of Fair Trade for Imports and Exports of the Ministry of Commerce, said recently that a new round of trade protectionism targeting Chinese exports is rising, citing the US economic slowdown and Europe’s debt woes.

On Friday, the US Commerce Department said it had found in a preliminary investigation that Chinese companies are dumping steel wheels, setting duties ranging from 110.58 to 193.54 percent.

Also in recent days, a group of US solar cell and solar panel makers filed a trade complaint against China, accusing the country of illegally dumping silicon solar cells and panels through massive subsidies.

Last Wednesday, Deputy US Trade Representative Demetrios Marantis said the US has recently investigated more than 200 Chinese domestic subsidy programs and is “going to keep pushing (China) and use all the tools”.