[By Pang Li/China Daily]

Is China's currency and trade performance a threat to the United States? Or are American politicians using China as a scapegoat for the country's economic problems?

"China bashing" has been on the rise in the US. It is widely thought that politicians of both parties are doing it to gain popularity in view of the coming elections.

For some years, Congress members have threatened to take action on Chinese imports to retaliate against what they see as China's manipulation of its currency level. The politicians say that the Chinese yuan is lower than what it should be if there was no government intervention. They charge that the undervalued currency enables China to have a large trade surplus vis-a-vis the US, and that this has caused the loss of American jobs.

These charges are refuted by the Chinese government, which argues that the US trade deficit is due to domestic factors and not Chinese policy. It also points to the 7 percent appreciation of the yuan versus the dollar in recent months.

This issue has been a central economic policy issue between the two major countries. It could escalate into a major battle.

In the first step, the US Senate, on Oct 3, voted 79-19 to allow a week-long debate on the Currency Exchange Rate Oversight Reform Act of 2011. The bill mandates a process for imposing tariffs on imports of a country with allegedly "misaligned currencies".

Though China is not named, it is obviously the target. The bill would, in effect, require the US Treasury Department to determine if China is manipulating the yuan. If it finds this to be the case, extra tariffs could be placed on some goods the US imports from China.

On Tuesday, the bill was passed by a vote of 63-35 in the US Senate. But before the trade measures can be taken, it has to also go through the House of Representatives and be approved by President Barrack Obama.

These two steps are far from assured. Although it seems a majority in the House are in favor, Speaker John Boehner said last week it is dangerous to be moving legislation through Congress, "forcing someone to deal with the value of their currency ... While I've got concerns about how the Chinese have dealt with their currency, I'm not sure this is the way to fix it."

Last Thursday, Obama accused China of "gaming" the trade system to the disadvantage of other countries especially the US. But he also expressed concern that the Senate bill "may not actually work ... as it may be only symbolic and it is probably not going to be upheld by the World Trade Organization (WTO)."

Nevertheless, the passage of the Senate bill has heightened US-China tensions and raised the potential of a serious trade war.