| Random Character |
|---|
|
| China Is Doing Its Best to Move to Flexible Yuan |
|
|
|
|
China is doing its best to move toward a freely traded currency, a central bank official said, appealing for understanding from two U.S. senators who are threatening trade sanctions unless the yuan's value rises. ``They should understand that China is doing its best,'' Wu Xiaoling, vice governor of the People's Bank of China, told reporters in Beijing today ahead of next week's visit by senators Lindsey Graham and Charles Schumer. ``China's economic restructuring needs a process.'' Graham, a Republican from South Carolina, and Schumer, a Democrat from New York, are sponsoring legislation that would impose tariffs on Chinese imports unless the yuan is allowed to strengthen. The senators will meet Chinese officials in Beijing and Shanghai before deciding whether to proceed with a vote on their bill by March 31. The yuan this week had its biggest weekly gain against the dollar since the government scrapped a decade-old peg in July, after Premier Wen Jiabao promised more flexibility. China is also under pressure to let the yuan trade more freely before the U.S. Treasury's semiannual report on global currency manipulation and President Hu Jintao's visit to the U.S. next month. The yuan's ``flexibility is increasing gradually,'' Wu said in a speech to a banking conference today. The central bank will improve the exchange-rate mechanism and ``allow market supply and demand to play a fundamental role in forming the exchange rate.'' U.S. lawmakers and manufacturers accuse China or keeping the yuan's value artificially low to spur exports. China's trade surplus tripled to a record $102 billion last year, helping to drive economic growth of 9.9 percent, the fastest among the world's major economies. Wen's Pledge The U.S.'s trade deficit widened in January to a record $68 billion, with China's share of the shortfall swelling 9.9 percent to $17.9 billion, the Commerce Department said March 10. `A flexible exchange rate will help to improve the international balance of payments, but large-scale fluctuations will harm the stable development of the economy,'' Wu said today. China on July 21 reset the yuan's value at 8.11 to the dollar, a 2.1 percent appreciation from the pegged level where it had been held since 1995, and linked its value to a basket of currencies including the euro and yen. Under the system, the yuan is allowed to rise or fall 0.3 percent against the dollar either side of a daily rate announced by the central bank. The yuan, a denomination of China's currency, the renminbi, rose 0.1 percent to 8.0313 against the dollar at 3:30 p.m. in Shanghai yesterday, bringing its gain for the week to 0.2 percent, according to data compiled by Bloomberg. It has gained almost 1 percent since the revaluation. The yuan's daily fluctuation exceeded 0.1 percent for the first time on March 15, a day after Premier Wen said China will ``add more flexibility to the exchange rate's trading band.'' Mutual Benefits China isn't manipulating the yuan and trade with the U.S. benefits both nations, Ma Kai, chairman of the National Development and Reform Commission, the nation's top economic planning agency, said in Beijing yesterday. Goods manufactured in China help U.S. consumers save $100 billion a year, while U.S. companies last year hired 50,000 new workers to help import goods from China, he said. ``U.S.-China relations are developing well, trade is growing quickly and it's benefiting the people of both nations,'' Ma said. The US and China should cooperate, rather than argue, he said. Ma cited a recent study by the American Chamber of Commerce in Beijing which he said showed 81 percent of U.S. companies operating in China were profitable in 2005. Forty-two percent of the companies said their profits from China were higher than their global average, he said, citing the study. China won't bow to pressure from the U.S. to bring forward its timetable for yuan flexibility, central bank Governor Zhou Xiaochuan told reporters in Beijing on March 11. China will follow its ``own principles'' on yuan reform and current fluctuations in the exchange rate are appropriate, he said. Bloomberg.com March 18, 2006 |
| < Prev | Next > |
|---|