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People's Daily Online>>China Business

Yuan's value 'unlikely' to rise much soon (2)

By Ding Qingfen in Beijing and Cecily Liu in London (China Daily)

09:27, March 15, 2012

Some countries, including the United States, have been pressuring China to allow its currency to rise further, saying its trade surplus demonstrates the need.

But Wen said China's foreign trade is "basically balanced", and the surplus dropped to 2.8 percent of the gross domestic product last year.

During this year's NPC and CPPCC sessions, People's Bank of China Governor Zhou Xiaochuan said China may "appropriately" widen the yuan's trading band.

"Premier Wen's remarks that China will continue to push for relatively big-scale and two-way fluctuation in the currency is excellent because it takes us a lot closer to the point that the renminbi can be freely traded," said Simon Derrick, head of currency strategy at BNY Mellon, an investment management and services company in New York.

Stephen Gallo, head of market analysis at financial service provider Schneider Foreign Exchange in London, agreed.

"Overall, the recent fluctuations in renminbi are more important from a structural rather than a cyclical perspective - in other words, China's words and its deeds certainly suggest that the case for a more flexible yuan is gaining traction on the part of policymakers," Gallo said.

The best way to solve the "difficulties and frictions caused by the trade imbalance between China and the US is to cooperate", Wen said.

Wen's remarks come at a time that trade and economic tensions between China and the US have been intensifying for several months, in which time the US lodged an appeal about China's rare earths exports policies with the global trade arbitrator and established an interagency trade enforcement unit to see whether nations, including China, play by the rules.

On Tuesday, the US brought up a case before the World Trade Organization about China export restrictions on rare earths, 17 rare elements used in a number of high-tech items ranging from wind turbines to missiles.

Japan and the European Union joined the US in challenging China's export policy.

Wen didn't mention the rare earths case during the news conference, but he called for cooperation between China and the US. "Cooperation would lead to healthy and sustainable growth for both economies," he said.

China and the US should promote "bilateral trade and two-way investment", enhancing cooperation in new energy, new materials, environmental protection, aviation and other high-tech fields, Wen said.

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