China threatens trade war over U.S. law on currency manipulation

A bill on the reform of the exchange rates monitoring system approved on Monday by the U.S. Senate will complicate the resolution of economic problems between China and the United States and could spark a trade war, the People's Bank of China said in a statement. "The yuan bill passed by the U.S. senate will not solve its problems, such as insufficient savings, a high trade deficit and high unemployment rate, but it may seriously affect the whole progress of China's reform of its yuan exchange rate regime and may also lead to a trade war which we would not like to see," China's central bank said. The U.S. Senate voted on Monday to open a week of debate on the Currency Exchange Rate Oversight Reform Act of 2011, which would allow the U.S. government to impose duties on Chinese goods imported to the US, to punish Beijing for allegedly undervaluing its currency.