U.S. uses Renminbi exchange rate issue as "diversion": expert

16:36, February 23, 2010      

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The U.S. has blamed China's great trade surplus with the U.S. on a stable Renminbi exchange rate. "In fact, this is a complete diversion from the fact that the U.S. is unable to continue reforming its own economic structure," commented Du Ping, an expert on international affairs and former commentator with Singapore-based Lianhe Zaobao.

Du pointed out that western developed countries including the U.S. are facing urgent issues about the reform of their economic structure. But in front of grave political risks, political leaders dare not do more in economic structure adjustments and reform. Instead, they chose the Renminbi exchange rate as an diversion, believing that pushing China to appreciate Renminbi is the easiest way out.

"This is unwise and unrealistic, and is also unfair to China" said Du. "Western countries should examine themselves to find the original cause."

The U.S.' exaggeration of Renminbi exchange rate issue was for its own interests. "As many economists have mentioned, the appreciation of Renminbi will not have a strong effect in boosting the U.S.' exports and is not a fundamental solution."

He noted that the western countries had a misunderstanding towards this issue. China's huge trade surplus was the result of China's different economic structure. With low material and human resource costs, Chinese products are cheap and competitive. However, this doesn't indicate that Renminbi is also "cheap", and Renminbi exchange rate is not the reason for China's surplus.

China's current exchange rate policies are correct and pragmatic, said Du. Relatively stable Renminbi exchange rate would benefit the economy of China, Asia and the whole world. With the strong influence of Renminbi, a dramatic fluctuation of its exchange rate would undoubtedly impact the international market. Since the 1997 Asian financial crisis, a relatively stable Renminbi exchange rate has contributed quite a lot to Asia and the world.

"I believe that China, a country that is sticking to its reform and opening up and is more reasonable and mature, will successfully address the exchange rate issue."

By People's Daily Online
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