China warns Washington on bill to force yuan rise

China has warned Washington it would oppose a proposed US bill aimed at forcing Beijing to allow its currency to rise. It said the passage could trigger a trade war between the world's top two economies.

Acting in concert, the Chinese central bank and the ministries of commerce and foreign affairs accused Washington of "politicising" global currency issues.

According to the foreign ministry the bill to be debated in the US this week violated World Trade Organization rules. It said forcing the yuan to appreciate would weaken joint efforts at reviving the global economy.

"By using the excuse of a so-called 'currency imbalance', this will escalate the exchange rate issue, adopting a protectionist measure that gravely violates WTO rules and seriously upsets Sino-US trade and economic relations," foreign ministry spokesman Ma Zhaoxu said in a statement posted on China's official government website on Tuesday.

"China expresses its adamant opposition to this."

US senators voted yesterday to open a week of debate on the Currency Exchange Rate Oversight Reform Act of 2011.  The act would allow US government to slap countervailing duties on products from countries that subsidised exports through undervaluation of their currencies.