13 Oct, 2011

The US Senate has passed a controversial bill that seeks to penalise Beijing for holding down its currency, according to Reuters.

The bill was passed 63-35 despite China warning that it could lead the world’s economy into a deep depression similar to the one experienced during the 1930s.

According to Reuters, the Chairman of the Senate Finance Committee, Max Baucus, said: “This bill sends an important message to China. China must stop flouting the rules, and ending its currency manipulation is one important step in that process.”

However, prior to the vote, the Chinese Xinhua news agency said that the legislation had similarities of the Smoot-Hawley tariff act in 1930 that many claim added to the troubles of the Great Depression.

It said: “Comparing the current political and social situation with that of 80 years ago, we can find stark similarities: an economic downturn, a high unemployment rate, marked popular discontent, and growing political conflicts, especially when presidential politics is getting hot.”

It added: “Lawmakers focus mostly on the economic interests of their own electoral districts but fail to consider major political and economic issues from an international perspective.”

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