Friday, September 16, 2011

China Says it Won't Bow to U.S. On Yuan

China will not permit a significant appreciation of its currency even if the United States passes a bill forcing China to do so, the official Xinhua news agency said in an editorial on Friday.
"China will not blindly, because of pressure from a bill in another country's congress, let its currency rise," Xinhua said, in response to recent comments made by Senate Democratic Leader Harry Reid on the Chinese currency.

Reid said the Senate will try to pass legislation in coming weeks aimed at forcing China to stop holding its currency below market value.

Many U.S. lawmakers and economists say China deliberately undervalues its currency, the yuan, against the dollar to give its companies an unfair price advantage in international trade. China rejects this criticism.

Xinhua said Reid has "stepped into a serious mistaken zone" over the yuan issue.

It said a stronger yuan won't help the U.S. labor market, and Reid is using China's currency as a scapegoat for deep-rooted structural problems in the U.S. economy.

The official Chinese news agency added that a "blind" appreciation of the yuan, also known as renminbi, would hurt China's exports and negatively impact on world trade and the global economy as a whole.

"Maintain a prudent monetary policy stance and keeping exchange rates at a reasonable and balanced level, as a way to avoid big swings in economic operation, is a principal for all central banks to follow, and China is not an exception," Xinhua continued.

Xinhua added that the fresh pressure on Beijing over the yuan value "is obviously against the pressing needs to stabilize the global economy."

Following Reid's comments earlier this week, China's Foreign Ministry urged U.S. lawmakers not to resort to "excuses" for trade protectionism


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