Chinese PM pledges stable yuan
Shanghai, October 16, 2011
Chinese Premier Wen Jiabao said China's exchange rate would remain stable to protect exporters, the official Xinhua news agency reported.
Wen said on Saturday "a basically stable exchange rate" would help maintain a steady level of exports and enhance business confidence, China's state radio reported.
China will also actively seek to expand imports and accelerate the development of foreign trade, Wen said during a tour of the southern Chinese city of Guangzhou.
"The international financial crisis is not over, and compared to the last one, it is in a different form. It is more confusing and complex," Wen was quoted as saying by state radio.
On Friday, Wen called for joint efforts to combat rising trade protectionism in the world and said trade friction had been politicised, the official China Daily reported yesterday.
Speaking at the opening of the Canton Fair in Guangzhou, Wen called on countries to combat the looming international financial crisis by employing rational methods to handle trade friction.
"The current challenge is that there is growing trade protectionism worldwide and more trade friction is politicised, which casts a large shadow over and hurts the global economic recovery," Wen was quoted as saying by the newspaper.
"China and the other nations should work hand-in-hand to open up markets to each other," Wen said.
The yuan has risen more than seven per cent against the dollar since mid-2010, when Beijing relaxed a de facto peg to the US currency, imposed in 2008 to protect its exporters during the global financial crisis.
But this has failed to silence critics in the US and elsewhere who argue the Chinese currency is undervalued by as much as 30 per cent.
Chinese exporters are concerned that their margins will be squeezed further if the yuan rises further against the dollar, especially as their production costs have increased, with wages rising rapidly and inflation above 6 per cent.
The yuan's gradual rise against the dollar has halted since mid-August, as the euro weakened because of the European debt crisis.
The US, which posted a record $29 billion trade deficit with China in August, is calling for a faster appreciation of the yuan.
US Secretary of State Hillary Clinton said it was time to stand up to China as she suggested an international coalition could form to force Beijing to raise the value of its currency.
Clinton said after a speech in New York that the Chinese "continue to try to game the system to their advantage and our disadvantage".
Despite the reluctance of the White House, the US Senate on Tuesday approved a bill to impose punitive taxes on Chinese imports if the yuan is not revalued.
The US Treasury Department said on Friday it would delay until later this year a ruling on whether China is manipulating its currency as Democrats tried to overcome Republican opposition to a bill that would punish Beijing for its currency policies.-Reuters