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30september20109Washington: A bill passed by the US House of Representatives, which challenges China's tight leash on their currency, the yuan, has elicited a measured response from Beijing.

The Currency Reform for Fair Trade Act will allow the US to impose trade sanctions if it deems China is manipulating its currency to give it an unfair trading advantage.

After years of China declining to address criticism from the US and Europe on the issue of currency undervaluation, the bill represents the US's strongest move yet and was passed by a vote of 348-79.

China's commerce ministry spokesman, Yao Jian, spoke out against the measure through official news source Xinhua on Thursday (September 30), claiming it does not conform to relevant World Trade Organisation rules. However, his response was somewhat muted in comparison to recent Chinese statements on US involvement with China's neighbors and ongoing territorial clashes.

With a raft of issues currently the source of debate between the two powers - including US support of His Holiness the Dalai Lama - some commentators have speculated that China is showing caution in order to preserve its relationship with Washington. Speaking on the issue, International Relations professor Jin Canrong of Renmin University in Beijing noted China is unlikely to "have any dramatic reaction to this bill's passing...China wants to preserve the stability of overall relations".

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