Key senator: Senate 'poised' to act on China currency bill

The chairman of the Senate Finance Committee said Wednesday that the upper chamber is "poised" to legislation meant to hammer China for its currency policies. 

The House overwhelmingly passed legislation late last month that is meant to cajole China into boosting the value of the yuan but Senate has yet to take it up.

"Economists estimate that China's currency is undervalued by 20 to 40 percent. And correcting this imbalance could create up to 500,000 new U.S. jobs. The U.S. House of Representatives recently passed legislation designed to correct this imbalance. The Senate is poised to follow suit," Sen. Max Baucus (D-Mont) said in a speech in the Chinese capital of Beijing, according to Reuters.

Baucus's comments could signal growing momentum for approving the bill in the Senate, though it's not clear when. Sen. Charles Schumer (D-N.Y.), a leading voice on the issue, has said he would push for it to be taken up during a lame-duck session that begins in the middle of next month.

But the Montana senator, who chairs the panel that oversees trade policy, did not commit to that time frame. Senate Majority Leader Harry Reid (D-Nev.), who faces a tough reelection contest, has not decided whether or not to take up the issue after the elections.

Labor unions and manufacturers have been pressing for action for years. They argue China’s currency manipulation lowers the cost of China’s exports, hurting U.S. workers and businesses. The U.S. trade deficit with China stands at $145 billion.

But past Democratic and Republican administrations have resisted the move, preferring to use diplomatic channels to spark a rise in the value of the yuan. Republicans who opposed the legislation expressed fear that authorizing the bill could lead to a "currency war" and damage U.S.-China trade relations.