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US distracts public with exchange rate issue

By Zhou Xiaoyuan (People's Daily Overseas Edition)

16:04, October 12, 2011

Edited and Translated by People's Daily Online

On Oct. 11, the U.S. Senate will vote on the final passage of the Currency Exchange Rate Oversight Reform Act of 2011, a bill intended to force China to allow the value of its currency to rise at a faster rate. Regardless of whether the bill will be signed into law, the exchange rate issue has again brought China-U.S. relations into the global spotlight.

In fact, the United States has frequently played the "exchange rate" card over the past many years to press China to revalue its currency and to divert public attention from its domestic problems, especially economic problems. The current bill has escalated the RMB exchange rate issue and is aimed at putting more pressure on RMB appreciation, maintaining dollar hegemony and overcoming the ongoing debt crisis.

"The real intention of the United States is to distract attention from its domestic problems and to contain China," said Xie Zuoshi, dean of the School of Economics and International Trade under Zhejiang University of Finance and Economics.

Despite knowing that faster RMB appreciation will not help redress the world's economic imbalance, many U.S. politicians have nevertheless chosen to bash China over its currency policy because these politicians seldom admit incompetence and like to use China as a scapegoat, claiming that China stole the jobs of Americans. As China has overtaken Japan as the world's second largest economy, containing China seems to be in the interests of the United States.

Zhao Xijun, deputy director of the Financial and Securities Institute under Renmin University of China, said that the exchange rate of a country's currency is a matter of national sovereignty, and the country itself has the right to choose between fixed and floating exchange rate regimes according to its own conditions. China adopts a managed floating exchange rate regime based on market supply and demand, which suits the present situation of its economy and financial markets.

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