China denies manipulating yuan


  • Business
  • Tuesday, 02 Sep 2003

BEIJING (AP) - China is not manipulating its currency and will not give in to "international browbeating'' to change its foreign-exchange policy, the government's main English newspaper said Tuesday as the U.S. treasury secretary arrived for a visit. 

The China Daily, in its top opinion piece, took issue with critics who say the country is pulling strings with the yuan in a protectionist attempt to help Chinese-based exporters sell inexpensive products. 

"The critics that believe China manipulates the yuan's value assume that every currency in the world should be floated in the market,'' China Daily said. "This assumption in itself is porous.'' 

It added: "Should China now give in to pressure only to face dire consequences later? No way.'' 

The commentary, in a forum considered China's primary English-language conduit to world opinion, came as U.S. Treasury Secretary John Snow was beginning a two-day visit to Beijing. 

The yuan issue was expected to come up during a meeting with Zhou Xiaochuan, China's central banker. 

China's central bank has kept the yuan - known also as the renminbi, or "people's money'' - fixed at about 8.28 to the U.S. dollar since 1994.  

It is allowed to fluctuate, but only in a tight band - a fraction of 1 percent - and only in closely regulated trading by those who have cleared official hurdles. 

In Japan on Monday, Snow and Japanese Finance Minister Masajuro Shiokawa agreed to encourage _ but not pressure - China to allow its currency to appreciate. 

"China seems to be keeping the yuan fixed and this is not competitive from an international financial viewpoint,'' Shiokawa said Tuesday in Tokyo. 

"I agreed with Secretary Snow that China should let the yuan float.'' 

Other state-controlled Chinese-language newspapers also ran pieces, apparently part of an attempt to take issue with what China perceives as interference in its currency policies. 

For nearly a decade, Beijing has kept its currency from trading in global markets - a strategy that brought stability and helped shield China from the 1997 Asian financial crisis. 

But as exports surge, China is facing growing demands to raise the value of the yuan. 

Washington and other governments complain the currency is too cheap and gives Chinese exports an unfair advantage, hurting foreign companies and wiping out jobs in countries trying to compete with China. 

Officials in China say they have no immediate plans to alter the exchange rate or let the yuan trade freely. 

But they are looking at ways to overhaul currency controls to help the country's businesses and to lessen foreign pressure for a stronger yuan. 

China Daily said a country retains the right to choose how it handles its own currency, and that "international browbeating'' cannot effectively mandate policy. 

What's more, it said, China's financial policies remain wise in a globalized and uncertain financial landscape. 

"What will happen if China allows the renminbi to appreciate now? Will American manufacturers, who cry hardest on this issue, benefit from a revalued yuan? Not likely,'' the newspaper said. 

But, it said, "a more expensive renminbi will artificially hurt the competitiveness of China's exports and smash the rice bowls of the workers whose livelihoods rely on trade.'' - AP 

For Another perspective from the China Daily, a partner of Asia News Network, click here

 

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