Linking the issue of China's currency regime reform to the United States' growing trade deficit with China is "detrimental to both sides," a spokesman with the Ministry of Commerce said Friday.?

"The current friction in Sino-US trade is normal," spokesman Chong Quan told a press conference on Friday.?

 

The response came after two US senators threatened Thursday to push for a vote on punitive tariffs against China for making little progress on reforming its currency regime.

 

He said that China hoped both sides could resolve disputes through peaceful consultation. "Taking restrictive or protective measures in Sino-US trade relations will damage the interests of both sides," he said.

 

On Thursday, Senators Charles Schumer and Lindsey Graham submitted a request to the Senate leadership for a vote on a bill seeking to impose a punitive tariff of 27.5 percent on Chinese imports unless China revalues its yuan currency.

 

China started to revalue its currency, the yuan, in July last year by linking it to a basket of currencies instead of the greenback alone and allowing it to move within a 0.3 percent floating band, up or down, each day.

 

Over the past 13 months, the currency has been strengthening gradually and has gained nearly 3 percent in value.

 

However the measure, together with the removal of export subsidies, the elimination of certain tax rebates and higher export tariffs, failed to take the wind out of the country's headlong export growth.

 

In August, the surplus hit US$18.8 billion, the third monthly high in a row, and may break US$20 billion some time this year.

 

"The reason for China's export boom is not the so-called undervalued Renminbi but the strong demand in the world market for China-made products and economic globalization, which has turned China into a world production base," said Dr. Shen Danyang, vice-president of the International Trade and Economic Research Institute under the Ministry of Commerce.

 

To ease its trade imbalance, the State Council is devising policies to facilitate imports.

 

(Xinhua News Agency September 16, 2006)