US groups urges Senate to reject China forex bill

We agree that China needs an exchange rate that better responds to global trade flows, the U.S.-China Business Council and about two dozen other groups said in a letter to each member of the Senate.

We strongly disagree that legislation is the best means to achieve that goal, the groups said.

Senator Charles Schumer, a New York Democrat, has threatened to bring a bill to the floor as early as this week.

However, with Congress expected to recess on Friday for the Independence Day holiday, time is dwindling for that.

Schumer and a bipartisan group of senators complain that China's exchange rate remains undervalued by as much as 25 percent to 40 percent, even after recent reforms.

Their bill would allow U.S. companies to request anti-dumping and countervailing duties on imports from China to offset the effect of its undervalued currency.

The business groups, which also included the U.S. Chamber of Commerce, said they strongly opposed that idea for a number of reasons, including that it probably violated World Trade Organization rules.

Also estimating how the correct value of China's currency would be inherently subjective, unilateral and potentially politicized since there is no agreed upon method to determine what a country's exchange rate should be in the absence of a market-based determination, the group said. (Reporting by Doug Palmer; Editing by Neil Stempleman)