U.S. criticism on RMB exchange rate has ulterior motive: expert

13:37, February 26, 2010      

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The United States blamed the RMB exchange rate policy for its huge trade deficits, but the ulterior motive is to seek excuses for the inability to reform its economic structure, a Singaporean expert said.

Du Ping, a well-known expert of international affairs and former Lianhe Zaobao commentator, made the remarks in a recent interview with Xinhua.

The United States, along with other developed nations, has problems in its economic structures, he said.

However, facing huge domestic political risks and pressures, leaders of these nations don't dare undertake a bigger adjustment in economic structures, the expert observed. Rather, they saw the RMB exchange rate as the excuse, the easiest solution to their problems.

That is unwise and unpractical, and also unfair to China, Du said, adding that the Western nations should seek the reasons from within and find the right and specific solution, rather than fussing over the RMB exchange rate.

He noted that the United States, acting in its own interests, especially economic ones, made excessive exaggerations over the issue of the RMB exchange rate. But many economists have already pointed out that the appreciation of the RMB is not a fundamental solution to U.S. trade problems.

Du believed there was a misunderstanding regarding China's RMB exchange rate on the Western side.

China now has a comparatively large foreign trade surplus, and that is mainly due to the difference of economic structures between China and the Western countries, he said.

Du pointed out that because of low costs of raw materials and human resources, Chinese products are cheaper and have a stronger competitive edge in the global market.

That, however, is not caused by the RMB exchange rate, he said. Hence China's trade surplus doesn't have much to do with its currency exchange rate.

Du said China's current policy on the RMB exchange rate is right and pragmatic. He added that China has done a lot to maintain the stability of the RMB exchange rate, which has been benefiting China, Asia, and the world as a whole since the 1997 Asian financial crisis.

The expert said he believes that China, committed to the reform and opening-up policy, will continue to do a great job where the RMB exchange rate is concerned.

Source: Xinhua
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