China warns ... is it Smoot Hawley Redux or overdue righting of the trade war going on since the 70's?

China warns of trade war if U.S. bill passes

Beijing accuses U.S. senate of “politicising” trade issues

* Warns of trade war, says bill would violate WTO rules

* Forcing the yuan higher would damage world recovery

* Says bill will not address underlying economic problems (Adds analyst quote, Xinhua commentary, links)

By David Stanway and Aileen Wang

BEIJING, Oct 4 (Reuters) - An angry China warned Washington on Tuesday that passage of a bill aimed at forcing Beijing to let its currency rise could lead to a trade war between the world’s top two economies.

China’s central bank and the ministries of commerce and foreign affairs accused Washington of “politicising” currency issues and putting the global economy at risk after U.S. senators voted on Monday to start a week of debate on the bill.

The response suggested China sees a greater risk from the proposed bill than it has in the past when U.S. lawmakers attempted to put forward similar legislation to speed up the pace of appreciation in the yuan, or renminbi.

Beijing made similar remarks last year after the House of Representatives passed a currency bill that later failed to make any further progress in Congress.

Tuesday’s coordinated salvo and the central bank’s warning of a trade war and a slowdown in China’s exchange rate reforms indicated Beijing was taking the latest currency bill more seriously.

“It is very rare for three different ministries of the country to refute something so quickly and strongly, showing how deeply the Chinese government is concerned about the yuan bill,” said Wang Zihong, a researcher at the China Academy of Social Sciences, a top government think tank.

“The strong responses made by the Chinese government may also suggest that the possibility would be quite high this time that the United States will pass the final bill in the end and that Beijing is worried about the possible negative impact on China’s exports resulting from the legislation,” he said.

I have to wonder, if this passes, and a trade war ensues if we would not find american manufacturing replacing chinese penalized goods in relatively short order as banks rushed to fill the lending gap to build the plants needed?

Or if this would precipitate a disaster by bringing about immediate worldwide trade lockjaw. And if it did if the USA would not be better off on the other side?

One thing is for sure, we will find the (we just moved our X-ray headquarters and pay no US taxes) Immelts, and (our jet engine manufactories are now in China) Pratt and Whitneys, and (our Iphones, Ipods, and Ipads are all made in Shenzen) Apples advising the president to VETO this bill.

After all it is THEIR bottom line which will face upset.

Capital is AMORAL.

Make it flow this way.