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China chides U.S. for criticism over trade, yuan
(Reuters)
Updated: 2006-02-14 20:39
China responded on Tuesday to U.S. demands for a stronger yuan to reduce its
trade surplus by saying market forces were already driving the currency and
warning Washington not to make political capital out of the issue.
Chinese Premier Wen Jiabao (R) shows the way
to President Bush at the Diaoyutai State Guest House in Beijing, November
20, 2005. China wants to work with the United States to reduce its
bilateral trade surplus, but Washington will not help if it tries to make
political capital out of the issue, an influential law-maker and economist
said on Tuesday. [Reuters] |
Tensions over trade have become a regular irritant in Sino-American relations
and risk overshadowing a visit to Washington in April by President Hu Jintao.
Cheng Siwei, an influential law-maker and economist, said China and the
United States should ease these frictions through consultations as equal
partners.
He was speaking a day after the administration of President George W. Bush,
facing rising political pressure over the record U.S. trade deficit, urged China
to further free up its currency to steer growth away from exports and toward
home-grown demand.
"We concede that China is running a relatively big trade surplus with the
United States, but they shouldn't politicize the issue," Cheng, vice-chairman of
the Standing Committee of the National People's Congress, or parliament, told a
China-U.S. business forum.
China revalued the yuan by 2.1 percent in July, scrapped the currency's
decade-old peg against the dollar and set it free to float within tightly
managed bands. To Washington's frustration, the yuan has since risen by less
than 0.8 percent.
Foreign Ministry spokesman Liu Jianchao reaffirmed China's determination to
continue with reform of the yuan -- code for eventually letting it float more
freely -- but said Beijing would dictate the pace of change.
"China will push forward the reform according to the development of the
situation and the principle that is most favorable to the international economy
and China's economy," he told a regular news briefing.
Wu Xiaoling, a vice governor of the People's Bank of China, said China was in
fact already letting market forces drive the yuan. The currency rose 0.14
percent last week, the biggest gain in any week since it was unshackled from the
dollar.
"I think this is the result of market operations and what we want is to let
the market mechanism, based on supply and demand, play a role," Wu told Reuters
when asked about the quickening pace of the yuan's climb.
The currency fell back slightly on Tuesday, ending at 8.0485 per dollar,
compared with 8.0458 at Monday's close.
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