China is under heavy pressure to adopt a freely floating exchange rate or risk a protectionist backlash in the US Congress. "It's important for them to actually carry out what they say they're going to do. So if they're going to float their currency, I want to see it bobbing around on the ocean," said Senate Finance Committee Chairman Charles Grassley, an Iowa Republican whose committee has jurisdiction over trade.
Grassley played a key role last year in blocking legislation that threatened China with steep tariffs. "But I can tell the Chinese my patience is wearing thin. They're a mature nation, but when it comes to all these international things and our raising questions with them, they're just like an international infant." Senate leaders have promised Sen. Charles Schumer and Sen. Lindsey Graham, a vote by March 31 on their bill threatening China with 27.5% tariffs on its exports to the United States. Sixty-seven senators voted for that legislation last year in an effort to get China to revalue the yuan.
US manufacturers say China's currency is undervalued by as much as 40 percent. Grassley voted against the Schumer-Graham bill but said it would get just as many votes if it came up again this year. "I consider that what they did last July was a major breakthrough, but I figure they've been playing footsie with us since then. They built up so much hope last July and now the hope becomes hopeless."
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