Heller says China currency bill could provoke trade war

WASHINGTON — Congressional pressure on China over its monetary policy could provoke a trade war that would hurt Nevada and its growing ties to the Far East, Sen. Dean Heller said Wednesday.

There is no question that China is manipulating its currency to an advantage over the United States, contributing to a steep U.S. deficit with its trade partner, the Nevada Republican said. But the Chinese have not responded to previous warnings by Congress, and he said the United States should try "working with other countries to get this to stop."

"Inciting a trade war with China will not create jobs," Heller said in a Senate speech on jobs issues. "In my home state of Nevada, a trade war could hurt tourism, stifle growth in renewable energy development, and increase costs to consumers at a time when they can least afford it."

In the speech and in remarks afterward, Heller outlined his opposition to a bill likely to be passed today  in the Senate that would pressure the Obama administration to sanction China over its currency manipulation.

The House voted in September 2010 for a China currency bill and nothing happened, Heller said.

"We made noise in the House and it made no difference," he said. "We are making noise over here (in the Senate), and it is not going to make any difference. All it is going to do is incite a potential trade war, and in this economy trade wars don't create jobs."

Heller's position contrasts with those of Sen. Harry Reid, D-Nev., and Rep. Shelley Berkley, D-Nev., his opponent in the 2012 Senate election who is raising it as a campaign issue.

Nevada's two Republican representatives, Joe Heck and Mark Amodei, have not said how they would vote on the bill, which has not been brought up in the House. During his recent election campaign, Amodei ran a television ad critical of China's role as a major U.S. debt-holder.

Most Democrats and some Republicans say the currency legislation is necessary to level the playing field after the Chinese have been slow to respond to U.S. pressure to equalize the value of the yuan with the dollar.

Others, including the Democratic senators from trade-conscious Washington state, fear the bill could have unintended consequences. The Obama administration also is not supporting it.

Berkley on Wednesday continued to criticize Heller over the matter.

"We are already in a trade war, and Nevada working families are losing," Berkley said in a call with reporters. "I think it is shameful Mr. Heller would stand with the Chinese government rather than Nevada's unemployed workers."

Berkley contended ongoing Nevada efforts to recruit Chinese investors for renewable energy projects, as well as casino visitors, "are totally separate and apart" from the currency issue.

"We welcome Chinese investment, but they can't have our jobs," she said.

Bill supporters have cited a study by the Economic Policy Institute, a liberal think tank, that says the U.S. trade deficit with China eliminated or displaced 2.79 million jobs from 2001 to 2010, including 14,842 in Nevada.

The institute contends currency manipulation was a leading factor, along with China's subsidies to its manufacturers, lax enforcement of environmental laws and intellectual property theft.

The think tank did not provide further explanation of its numbers for Nevada, which appeared to differ from information at the state's Commission on Economic Development.

Nevada exports to China, led by minerals and electronics, grew 866 percent in value from 2001 to 2011, from $62 million to $600 million, according to the commission.

Applying a Department of Commerce metric that equates one job for each $181,000 in export value, Nevada jobs from exports to China would have grown from 343 in 2001 to 3,315 in 2010.

Berkley said the problem is broader. "In order for the economy of Nevada to recover, the economy of the United States needs to recover, so any lost jobs anywhere hurts us," she said. "So a lost job in Rhode Island or Michigan or Delaware due to Chinese manipulation of their currency hurts."

Contact Stephens Washington Bureau Chief Steve Tetreault at stetreault@stephensmedia.com or 202-783-1760.