Sen. Charles SchumerChuck SchumerForced deadline spurs drastic tactic in Congress Democrats call on Biden administration to ease entry to US for at-risk Afghans Predictions of disaster for Democrats aren't guarantees of midterm failure MORE (D-N.Y.) is using a Sino-American summit to strike at Chinese economic policies.
Schumer and two other Democrats announced Monday they will introduce legislation hitting China for currency manipulation just as Chinese President Hu Jintao is set to arrive in the United States for a critical summit with President Obama.
"The U.S. can't afford to keep losing jobs and wealth because China manipulates its currency," Schumer told reporters on a press call. "China's currency is like a boot to the throat of our economic recovery."
Monetary issues were expected to be a dominant issue at the summit, and Hu raised the temperature on the issue Monday by saying the “current international currency system is a product of the past” in written answers to questions posed by The Washington Post and The Wall Street Journal.
Hu downplayed criticism of China’s currency, and sought to turn the table on the U.S. by criticizing the Federal Reserve’s bond-purchasing program, which is meant to stimulate the U.S. economy and lower the unemployment rate. The Fed is purchasing $700 billion in bonds, a process that could lower the value of the dollar.
“The monetary policy of the United States has a major impact on global liquidity and capital flows and therefore, the liquidity of the U.S. dollar should be kept at a reasonable and stable level,” Hu wrote in one response.
Schumer and other senators have long said China’s undervalued currency exacerbates a growing U.S.-China trade deficit, hurting U.S. workers and businesses. They argue China’s currency is undervalued by 25 to 40 percent. China’s currency policy is also an issue for U.S. labor unions and many manufacturers.
Sen. Debbie StabenowDeborah (Debbie) Ann StabenowMichigan Republican John James 'strongly considering' House run Updated reconciliation text includes electric vehicle tax credit opposed by Manchin Stabenow calls for expansion of school mental health services MORE (D-Mich.), who with Sen. Bob CaseyRobert (Bob) Patrick CaseyOn the Money — Inflation hits highest level in decades Pressures aligning on Biden, Democrats to forgive student loans Senate Democrats grow less confident in Manchin MORE (D-Pa.) joined Schumer on the call, described currency manipulation as part of an aggressive economic policy pushed by China to grow its exports at the expense of the U.S. She also faulted China for its "indigenous innovation" policy, which U.S. businesses complain has sought to force them to transfer innovation and intellectual property to Chinese firms as a price of doing business in China.
"They are getting more and more aggressive," Stabenow said of China.
The legislation unveiled Monday could lead to higher tariffs on imports from China if that country is found to be manipulating its currency to lower its value.
Democrats also said their bill would make it more difficult for the Treasury Department to avoid labeling China a currency manipulator and that it would bar any companies from a country found to be manipulating its currency from receiving a government contract.
The Obama administration has been loath to state that China is manipulating its currency, even though that country closely controls the value of the renminbi, also known as the yuan.
A finding of manipulation under existing statute would only trigger negotiations between the two countries, but the Obama administration, like the Bush White House before it, has not wanted to antagonize China over the issue.
The White House wants cooperation from China on a host of economic and foreign policy issues, including negotiations with North Korea on that country’s nuclear program. Talks on North Korea are expected to be a huge part of this week's summit, with some in the U.S. hopeful of progress on the issue.
The House approved legislation in September meant to punish China for currency manipulation, but the Senate did not take up the bill. Currency legislation would face a tougher path forward in the new Congress, as House Republican leaders on the issue have indicated it is not a priority.
Still, Schumer on Monday insisted there was bipartisan support for his legislation, and that its goals meshed with those of Tea Party Republicans who helped the GOP win a majority in the House.
He said there was not enough time to move legislation in the lame-duck session when Democrats still held the House, but insisted legislation could be approved in this Congress.
Schumer and other supporters of China currency legislation for years have pushed for a bill, but so far nothing has crossed the finish line and reached the White House.
Obama is set to host a rare state dinner for Hu on Wednesday night.
—This story was posted at 9:37 a.m. and updated at 11:02 a.m.