U.S. Senate unlikely to follow House on China yuan

* G20 currency promise buys time for diplomatic efforts

* Currency legislation to be left to next U.S. Congress

By Donna Smith

WASHINGTON, Oct 24 (BestGrowthStock) – The U.S. Senate is unlikely
to take up pending China currency legislation following a
weekend promise by the Group of 20 economic powers to shun
currency devaluations for trade advantage, analysts said on
Sunday.

Finance ministers from G20 leading and emerging economies
agreed at a weekend meeting in South Korea to “refrain from
competitive devaluations” of their currencies and to pursue a
full range of policies to reduce excessive external
imbalances.

Congressional elections will be held in the United States
on Nov. 2, and only a few weeks are planned for a post-election
session in which the U.S. Congress has to tackle major spending
and income tax issues.

There was little chance even before the G20 meeting that
the Senate was going to act on legislation passed by the House
of Representatives aimed at pressuring China to raise the value
of its currency.

But pressure to act has been mounting from some lawmakers
and U.S. manufacturers hurt by China’s trade advantages and it
has been an issue in some election campaigns in industrial
states like Pennsylvania. The G20 agreement buys U.S. Treasury
Secretary Timothy Geithner some time to pursue a diplomatic
approach with Beijing over the value of the yuan.

“I think he bought some time with the Congress,” said
Donald Straszheim, senior managing director for China research
at ISI Group in Los Angeles. “The Senate isn’t going to take
this up in a lame duck session. There is just too much
potentially to lose and not enough to gain. They’ll leave this
until the next Congress.”

The Nov. 2 elections will determine which party controls
the next Congress, which will be seated in January. Republicans
are poised to make big gains and possibly take control of the
House. Democrats are likely to retain slim control of the
Senate with Republicans expected to pick up a number of seats.

“I don’t think they (the Senate) are ever going to take it
(the China currency legislation) up,” said Paul J. Markowski of
Global Strategies-Analysis Group/MES Advisers, a New York
consulting group.

ACTION WILL TAKE TIME

Geithner, who met briefly on Sunday with Vice Premier Wang
Qishan in eastern China, may have secured some promises from
the Chinese to take action on its currency but it will take
time, Markowski said.

The main aim of the two days of finance minister talks,
which precede a G20 summit in Seoul on Nov. 11-12, was to ease
the currency strains that some economists feared could escalate
into trade wars.

U.S. officials said they were pleased with the main points
of the G20 agreement — although it stopped short of setting
any targets to reduce trade imbalances.

There was little reaction on Sunday from lawmakers who
claim China’s yuan is misaligned in value, distorting trade and
stealing U.S. jobs.

But a spokesman for Senator Debbie Stabenow said the
Michigan Democrat would push to pass the currency legislation.

“We must hold China accountable and stop currency
manipulation which hurts Michigan businesses and workers,”
spokesman Matt Williams said.

The House-passed legislation would threaten China with
tariffs on some of its goods unless there was significant
upward movement in the value of the yuan.

A number of international analysts have said threatening
China would be counterproductive and Geithner has pursued a
more diplomatic approach, trying to convince Beijing it would
be in its own best interest to adopt a market-based currency
regime.
(Editing by Mohammad Zargham)

U.S. Senate unlikely to follow House on China yuan