Beijing stays firm on yuan: analyst

09:59, June 11, 2010      

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Analysts told the Global Times Thursday that Beijing should maintain independent decision-making rights on currency appreciation rather than compromising to Western pressure.

The remarks came after US Treasury Secretary Timothy Geithner said Thursday that China's refusal to revalue its currency was impeding global economic reforms, amid pressure from the US Congress to impose sanctions on Beijing.

"A more flexible RMB (yuan) will allow market forces to play a more active role over time in facilitating strong, balanced and sustainable growth globally," Geither told a congressional hearing on the US-China economic relationship.

He Maochun, director at the Research Center of Economy and Diplomacy at Tsinghua University, said that the demand for the yuan's appreciation was not urgent because the real effective exchange rate of the yuan has rebounded slightly since the outbreak of the Eu-ropean debt crisis.

He said that making the yuan more flexible is a challenging task, and that it is not the ideal time for China to do so amid the present economic situation.

ChinesePresident Hu Jintao stressed last month that China would adjust its exchange-rate policy at its own pace.

In March, US lawmakers were united in their call to President Barack Obama to brand China as a currency manipulator, saying that Beijing kept the yuan undervalued against the US dollar to gain a trade advantage.

They also introduced a bill merging previous legislative efforts that would punish currency manipulation as an unfair subsidy and would launch a set of actions, including imposing stiff duties on Chinese imports.

"We are going to move," Democratic Senator Charles Schumer declared at a hearing of the US-China Economic and Security Review Commission on Wednesday.

"In the next two weeks, my colleagues and I intend to move forward with legislation to provide specific consequences for countries that fail to adopt an appropriate policy to eliminate currency misalignment," Schumer added.

However, Obama had asked US lawmakers for a three-month period from April to give him room to impel Beijing into action, putting off the release of a US Treasury report that could have branded China a currency manipulator.

Chen Baosen, a researcher at the Institute of US Studies of the Chinese Academy of Social Sciences, told the Global Times that Obama's position on the yuan became more moderate after China made clear its stance at the nuclear summit in April.

"The US increasingly realizes that the yuan appreciation wouldn't fundamentally solve the trade imbalances between the two sides," he said. "Although the US Congress and the White House have differences on the issue, the former's legislative action will not be binding without the endorsement of the latter.

Source: Global Times


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