China Says Yuan Is Not To Blame For Trade Surplus
March 16, 2010
China Says Yuan Is Not To Blame For Trade Surplus:BEIJING: China on Tuesday again turned a deaf ear to U.S. demands for a stronger yuan, saying the currency is not the cause of its trade surplus and pledging to keep the exchange rate stable to help its exporters.
Beijing and Washington appear to be locked in a dialogue of the deaf in the run-up to a determination by the U.S. Treasury Department due on April 15 as to whether China is manipulating its exchange rate.
“If the exchange rate issue is politicised, then in coping with the global financial crisis this will be of no help in coordination between the parties involved,” Commerce Ministry spokesman Yao Jian told a regular news conference.
He described two-way trade ties as very important and said Beijing was willing to enhance cooperation with Washington. But he rejected the argument that China‘s hefty trade surplus with the United States was due to the yuan, also called the renminbi, which some U.S. economists judge to be 25 percent or more undervalued.
“The trade surplus is not caused by the renminbi exchange rate. The trade surplus is an outcome and phenomenon of globalisation. It will exist for a time,” he said.
Yao was speaking a day after 130 U.S. lawmakers demanded that President Barack Obama get tough with China over its currency practices.
“The impact of China‘s currency manipulation on the U.S. economy cannot be overstated. Maintaining its currency at a devalued exchange rate provides a subsidy to Chinese companies and unfairly disadvantages foreign competitors,” the legislators said in a letter.
NO REASON AT ALL :
Yao asked rhetorically whether China, which has a trade deficit with Japan, South Korea and some developing countries, should emulate the United States and pass a law to deal with those countries.
“So we hope that in surmounting the crisis and reviving its economy, the United States should be a promoter of free trade, not an obstacle to it,” he said.
If the Treasury does rule that China is manipulating its exchange rate, the U.S. government would be required in principle to start “expedited negotiations” on the issue.
Premier Wen Jiabao on Sunday dismissed U.S. complaints about China‘s exchange rate, calling them counterproductive and saying he did not believe the yuan was undervalued.
But Wen also recommitted China to pushing ahead with reform of the yuan’s exchange rate mechanism — leaving the door open to reintroducing exchange rate flexibility if it suits Beijing.
China has kept the yuan pegged around 6.83 per dollar since July 2008 to help its exporters, and Yao, the Commerce Ministry spokesman, said stability would remain the watchword in 2010.
“We have no reason at all to view the future market with unfettered optimism,” he said of the outlook for exports.
“So we will keep our economic and trade policies, including exchange rate policies and export tax rebates, stable this year,” he added.
