Yuan revaluation 'China's choice': Geithner

08:26, April 07, 2010      

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China will get to know that more yuan flexibility would benefit it, U.S. Treasury Secretary Timothy Geithner said on Tuesday as China's Foreign Ministry defended the country's currency policy is not aimed at seeking a huge trade surplus.

Geithner, who is visiting India, said that the global economic recovery "looks quite strong now," also said it was "China's choice" whether or not it revalues the yuan, or RMB, according to a Reuter report.

In Beijing, a Foreign Ministry spokeswoman and two government economists held out the prospect of the yuan being allowed to resume its rise after a 20-month pause, due to the abrupt meltdown of the world's financial system and the Wall Street.

But they said at separate briefings that Beijing would proceed with caution and on its own terms.

"We don't want to see our exchange rate kept unchanged," said Zhang Yan-sheng, director-general of the Institute for International Economic Research, a think-tank under the National Development and Reform Commission.

Making the yuan more flexible was a challenging task, not least because of a lack of hedging instruments in China and domestic companies' lack of experience in handling a fluctuating exchange rate, the economist said.

Meanwhile, the White House said that U.S. President Barack Obama will raise the currency issue with Chinese President Hu Jintao in Washington next week on the sidelines of a nuclear security summit, hosted by Obama himself.

"The administration will continue to press the Chinese to ... value their currency in a way that is much more market-based," White House press secretary Robert Gibbs told a news briefing.

"That is the way we think is best at this point, and I think you've seen reports of the past week or so about the Chinese beginning to take some steps and realize on their own that this is the best path for them," Gibbs said.

With U.S. unemployment stuck near 10 percent, Obama faces rising pressure to persuade Beijing to allow the yuan to resume appreciation so as to help U.S. enterprises compete with Chinese goods.

"I am confident that China will decide it's in their interest to resume the move to a more flexible exchange rate that they began some years ago and suspended in the midst of the crisis," Geithner told India's NDTV.

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