UPDATE 2-U.S. Senate poised to act on China yuan-lawmaker

* Sen. Baucus: Senate could act on China currency concerns

* U.S. Treasury seen issuing currency report on Friday

* U.S.-China relations at “fork in the road,” Baucus says
(Adds background on Treasury currency decision)

By Doug Palmer

WASHINGTON, Oct 13 (BestGrowthStock) – The U.S. Senate is poised to
pass legislation aimed at pressuring China to raise the value
of its currency, unless Beijing works with the United States to
address its concerns, a U.S. senator said on Wednesday.

“We must find a path forward that allows China to
meaningfully appreciate its currency to the benefit of both of
our economies,” Senate Finance Committee Chairman Max Baucus
said in the text of a speech delivered in Beijing.

“Economists estimate that China’s currency is undervalued
by 20 to 40 percent. And correcting this imbalance could create
up to 500,000 new U.S. jobs. The U.S. House of Representatives
recently passed legislation designed to correct this imbalance.
The Senate is poised to follow suit,” Baucus said.

The Senate Finance Committee has jurisdiction over trade
issues, giving Baucus a major role in any China legislation
that reaches the Senate floor.

U.S. lawmakers argue an undervaluation of China’s yuan
currency has given Chinese producers an unfair trade advantage.
The United States has pressed to Beijing to allow the yuan to
rise more quickly in value to help reduce its reliance on
exports and bring about better balance in the global economy.

The House approved a bill last month threatening China with
punitive duties on some exports to the United States if the
yuan does not rise significantly in value. Congress is on a
break ahead of Nov. 2 elections, so any Senate vote would not
happen until lawmakers return in mid-November.

If the Senate and House agreed on a bill, President Barack
Obama would have to sign it for it to become law. The Obama
administration has declined to take a stand on the House
legislation.

CURRENCY REPORT DUE

Baucus’ warning comes just days before a deadline for the
U.S. Treasury Department to decide in a semi-annual report
whether to formally label China a currency manipulator — a
step that would rile Beijing, which says its yuan policy is an
internal matter.

While the report is often delayed, an industry official
said his group had been told by an administration official the
deadline would be met. A Treasury spokeswoman declined to say
whether the report would be released on time.

U.S. Treasury Secretary Timothy Geithner delayed the April
15 report for more than two months to give China additional
time to reform its currency policy. Beijing did loosen its
currency to the dollar on June 19 and since then it has risen
about 2.4 percent in value.

China’s actions to control the yuan helped fuel a record
quarterly surge in its foreign exchange reserves, which hit
$2.65 trillion in the third quarter. [ID:nTOE69C062]

Geithner has said he plans to work through the Group of 20
leading nations forum to persuade China to allow the yuan to
rise more quickly in value. However, it is not clear how much
support he has from other G20 members.

G20 finance ministers are scheduled to meet Oct. 22,
followed by a leaders summit Nov. 11 in Seoul.

Baucus, in his speech to the U.S.-China Business Council,
said U.S.-China economic relations were at “a fork in the road”
similar to 2000, when the U.S. Congress decided to end decades
of annual debates over China’s trade status and approve
permanent normal trade relations with the Communist power.

“Today, there are two clear paths before us. We can go down
the path of division and discord. Or we can work together to
find mutually-beneficial solutions to what divides us,” the
Montana Democrat said.

Baucus also called on China to accelerate efforts to join
the World Trade Organization agreement on government
procurements and revise “indigenous innovation” policies that
force foreign companies to move their research and development
operations to China in order to access the Chinese market.
(Reporting by Doug Palmer; Editing by Xavier Briand)

UPDATE 2-U.S. Senate poised to act on China yuan-lawmaker