1 Oct 2010

Tension over currency penalty bill

11:04 am on 1 October 2010

Diplomatic tensions between China and the United States have intensified, after China warned that a US bill penalising it for currency manipulation could harm relations between them.

A foreign ministry spokesperson said China was resolutely opposed to the bill, which treats undervalued currencies as illegal export subsidies.

China is accused of keeping the yuan artificially low to help its exporters.

The bill, which allows tariffs to be applied to Chinese goods imported to the US, has been voted through by the US House of Representatives, but still needs Senate approval.

The move does not have widespread support from business and political groups.

US-China Business Council vice president Erin Ennis, says it will do more harm than good to job creation and growth.

The White House says the bill does not conflict with World Trade Organisation rules.