International trade relations between the US and China could be strained even further as soon as the proposed legislative measure gets the nod of the US Senate. Chinese officials warned that even if the trade legislation is passed, they will not ease up on their stand regarding their yuan situation. The US Senate is set to launch a landmark bill addressing their increasing international trade deficit with China.

Chinese Foreign Ministry spokeperson Qin Gang, who refused to make comments during the past weeks, asked the US legislators not to dip their hands on the sensitive issue. He emphasized that the value of their currency must conform with the standards of the Chinese people and world economy and not of the United States. The international trade issue between both countries may drag on into the 2008 US Presidential Election.

Over the years, legislators as well as manufacturing firms from the United States have been pointing fingers towards the refusal of China to revalue its currency. This triggered the increase in the US trade deficit with China that was valued $233 billion in 2006. In response to the undervaluing of the currency, politicians proposed a bill that will impose tariffs on Chinese imports in the United States. In a series of international trade meeting last month, US President George W. Bush prodded China to immediately implement reforms that can hasten the appreciation of the yuan. In the same meeting, Bush made a guarantee that there was no need to enact legislative bills in order to persuade China to act quickly.

Alan Holmer, who is the Treasury Department's special envoy to China, is uncertain whether China will be branded as a currency manipulator when the Department releases its semi-annual report. For his part, Qin claimed that the United States's lax economic system was responsible for its international trade deficit with China. Likewise, he said that trade concerns should not be dragged into economic ties between China and the United States. The two countries will have a bilateral meeting on June 20-21 on matters concerning security.

Meanwhile, the proposed legislation authored by four US senators will enforce stiff penalties on China in order to force the country to deal with the yuan situation as soon as possible. Some of the major provisions of the bill include denial of international trade funding and rejection of insurance projects in China. The principal authors insist that the bill will not be in violation of the existing international trade rules of the World Trade Organization (WTO).