WASHINGTON — President Barack Obama accused China of unfair trade practices that hurt the American economy Thursday as the US Senate advanced a bill to retaliate against Beijing for alleged currency manipulation.
Obama, speaking at a White House press conference, stopped well short of backing the legislation and even worried it could violate World Trade Organization rules but delivered an unsparing assault on China's policies.
"China has been very aggressive in gaming the trading system to its advantage and to the disadvantage of other countries, particularly the United States," he declared, accusing Beijing of keeping its yuan weak against the dollar.
"And that makes their exports cheaper, and that makes our exports to them more expensive. So we've seen some improvement, some slight appreciation over the last year. But it's not enough."
His comments came as the US Senate defied White House complaints and stiff opposition from China and big business to press ahead with legislation punishing Beijing for alleged currency manipulation.
The proposal, powered by a tide of US voter anger at the sour US economy and high unemployment ahead of November 2012 elections, calls for retaliatory duties on Chinese exports if the yuan's value is unfairly "misaligned."
Senators voted 62-38 to end debate on the measure, barely clearing a 60-vote hurdle, as supporters promised the bill would help create much-needed jobs and narrow the country's yawning trade deficit with China.
While the legislation seemed set to pass in the Senate as early as Thursday, it faced an uncertain future in the House of Representatives, where Republican House Speaker John Boehner has signaled the legislation will die.
"It's dangerous. You could start a trade war. And a trade war, given the economic uncertainty here and all around the world -- it's just very dangerous, and we should not be engaged in this," Boehner said.
Few in Washington dispute the charge that China keeps the yuan unfairly low against the dollar, giving its goods as much as a 30 percent edge over comparable US products, widening the US trade deficit and costing American jobs.
But the measure's opponents warn that it risks sparking a trade war with China, and say a rise in the yuan will boost manufacturing and therefore jobs in countries like Vietnam or Malaysia -- not in the United States.
They contend that, if successful, the bill will increase the cost of commodities or consumer goods from China, hurting rather than helping US businesses and families.
The legislation's backers, an unusual coalition of Democrats and Republicans, have said it's time for Washington to take on Beijing, and predict a boost in the yuan will make Chinese workers wealthier and more likely to buy US goods, thus creating jobs and narrowing the trade gap.
They also say that current US law and multinational dispute mechanisms have failed to curb what they call Beijing's unfair practices, which also include favoring Chinese producers for government contracts and tolerating rampant intellectual piracy.
Republican House leaders have pointed out that Obama's Treasury Department has refrained from labeling China a currency cheat and said they have no plans to bring the legislation up for a vote, effectively killing it.
But House aides say it could return to life if the issue somehow became a core dispute as Obama faces off with his as-yet-undetermined Republican foe ahead of next year's elections.
That contest is sure to turn on deep voter anger at the sour economy's sluggish recovery from the global meltdown of 2007-2008, with stubbornly high unemployment of over nine percent a drag on Obama's bid for a second term.
The bill would empower US businesses and, in some cases, labor unions to trigger a US government investigation into alleged currency manipulation and seek retaliatory duties on the offending country's exports.
It also aims to make it harder for the US Treasury Department to stop short of labeling China a currency manipulator and restrict the White House's ability to waive the resulting sanctions.
China's top newspaper -- the People's Daily, seen as the Communist Party's mouthpiece -- accused US lawmakers Wednesday of touting the bill as a cure-all for economic troubles they have failed to address.
"Faced with the discontent of the American people, some US lawmakers are using the Chinese currency to pass the buck over their political incompetence," said the paper, echoing angry denunciations from Chinese officials all week.
The legislation has split the top two Republican White House contenders, with Texas Governor Rick Perry opposing it and former Massachusetts governor Mitt Romney saying he would confront China on his first day in office.
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