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Two US senators decided on Friday to drop their controversial bill to impose tariffs on Chinese imports, following a meeting with US Treasury Secretary Henry Paulson, who urged them to delay a vote on the bill.

Senators Charles Schumer (D-New York) and Lindsey Graham (R-South Carolina) agreed to drop their legislation threatening to levy tariffs on imports from China if Beijing refused to revalue the yuan, claiming the currency was being "artificially depressed" to keep Chinese products cheap on world markets. However, both men said a new measure would be worked on next year to pressure China on the currency issue.

"It's a win for the Treasury Secretary," Nicholas Lardy, a fellow at the Institute for International Economics in Washington and an expert on China, was quoted by Bloomberg as saying.

Lardy also said that the Chinese government understood that Schumer's bill, which would have imposed tariffs of 27.5 percent on Chinese imports, would never become law. His claim was echoed on the other side of the Pacific as Han Meng, economist with the Chinese Academy of Social Sciences said: "Such a bill, if passed, would result in a lose-lose situation for China and the United States."

Strong opposition to the bill from US business circles was clear evidence that the proposal was not in the interests of the US, said Han.

A final death blow to the bill is that the House of Representatives is not considering passing such legislation, a fact acknowledged by Senators Schumer and Graham.

China's currency, the renminbi, has appreciated almost 5 percent since its revaluation last July, when China ended its decade-long direct peg to the US dollar and switched to a managed floating exchange rate regime. Its daily benchmark, or the central parity rate for the US dollar, was 7.9087 yuan on Friday.

(China Daily September 30, 2006)