Chinese premier says no basis for drastic currency appreciation

17:23, September 23, 2010      

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Chinese Premier Wen Jiabao gives a speech at a welcoming banquet hosted by U.S. friendly organizations in New York on Sept. 22, 2010. (Xinhua/Huang Jingwen)

Visiting Chinese Premier Wen Jiabao said here Wednesday there was no basis for the drastic appreciation of the yuan, the Chinese currency.

During a speech at a welcome banquet by U.S.-China friendship organizations, Wen said the issue of the yuan exchange rate was an economic one and must not be politicized.

Some have linked the yuan exchange rate with China's favorable balance of international trade, saying China keeps the level of the Chinese yuan low to win competitive advantages.

However, Wen said, there was no certain connection between the exchange rate and a favorable balance of trade.

For example, the United States had maintained a trade surplus for more than 90 years, from the 1870s to the 1970s. But this had become a trade deficit since then and the imbalance had grown bigger in the following years, which was obviously not caused by exchange rate fluctuations, Wen said.

China had maintained a favorable balance against the United States and the European Union, but had a trade deficit with Japan and South Korea, which indicated the trade imbalance between the two countries could not be explained by the level of the yuan exchange rate, Wen said.

He said China had always been highly responsible on the issue of the yuan exchange rate and the issue should be considered with a historical view.

According to statistics based on the exchange rate index of the Bank for International Settlements, the yuan had appreciated by a massive 55.2 percent since January 1994 as of July this year.

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