MercoPress. South Atlantic News Agency

China warns Washington of a ‘trade war’ if US Senate votes punishing the Yuan

Vice Foreign Minister Cui Tiankai reacts to Tuesday’s vote

China reiterated that an expected vote this week in the US Senate on a bill intended to pressure Beijing to allow its currency to raise if made into law would result in a trade war and hurt US-China ties.

China's Vice Foreign Minister Cui Tiankai made the comments to reporters during a briefing on Monday.

Cui also said that a trade war between China and the United States would further hurt US jobs growth and hinder recovery of the world economy.

“The US Senate's Currency Exchange Rate Oversight Reform Act of 2011, (which is targeted at China's so-called ‘currency manipulation’) does not reflect the reality of the China-US trade relationship and will have a negative impact on the development of the relationship”, said Cui.

The US legislation, which calls for tariffs on imports from countries with deliberately undervalued currencies, will head toward a final Senate vote on Tuesday.

Many economists say China holds down the value of its Yuan to give its exporters an edge in global markets. But Beijing says it is committed to gradual reform of the Yuan, which has risen 30% against the dollar since 2005.

Cui statements came ahead of the upcoming Asia-Pacific talks between China and the United States, which will also include the US sale of arms to Taiwan.

“Although the consultation is focused on Asia-Pacific affairs, sound and stable China-US ties are the foundation for our cooperation on these issues. Therefore, we will discuss relevant issues during our consultation” said the top Beijing official.

As for the US's arms package to Taiwan, Cui said that “putting the issue on the table” is the best way to avoid further damaging the development of bilateral relations.

Cui said China welcomes an active and constructive role for the United States in the Asia-Pacific region and called on the country to join hands with regional nations to promote regional peace, stability, development and prosperity.

Tuesday's consultation will be co-chaired by Cui and U.S. Assistant Secretary for East Asian and Pacific Affairs Kurt Campbell.

“The consultation aims to strengthen communication and coordination in order to cope with challenges in regional and international affairs” Cui said adding that the differing opinions of China and the United States on international and regional issues are “fairly normal”.

“That's why we need to strengthen consultation,” Cui said