China reacted furiously Wednesday after the US Senate voted to pass a bill that would punish Beijing for alleged currency manipulation, saying it broke WTO rules and could set off a trade war, AFP reported.
US lawmakers defied warnings from Beijing and the White House to approve the measure, which leaders of the Republican-led House of Representatives have warned could be "dangerous" for the worlld's largest economy.
The proposal, powered by a tide of US voter frustration at a sour economy and high unemployment ahead of November 2012 elections, envisions retaliatory duties on Chinese exports if the value of the yuan is unfairly "misaligned".
China's foreign ministry called it a breach of World Trade Organisation rules, while the official Xinhua news agency said it was a "ticking time bomb" that could set off a trade war.
"It is a serious breach of WTO rules, which cannot solve the US's own economic and employment issues, and will... seriously interfere with Sino-US economic and trade relations," said foreign ministry spokesman Ma Zhaoxu.
US President Barack Obama has declined to back the legislation, but accused China of "gaming the trade system" in a way that hurts the US economy.
Republican House Speaker John Boehner has signalled that he will not bring the legislation to a vote, calling it "dangerous" to economic relations between the world's largest and second largest economies.
Few in Washington dispute the charge that China keeps the yuan low against the dollar, giving its goods as much as a 30 percent edge over similar US products, widening the American trade deficit and costing US jobs.
But the measure's opponents warn that it risks worsening ties with China, and say a rise in the yuan would merely boost manufacturing and jobs in countries such as Vietnam or Malaysia -- not in the United States.

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