China offers no timetable for revaluing currency


China offers no timetable for revaluing currency

Despite failed talks, U.S. to continue to press for yuan to float with market

By JULIE CHAO Cox News Service

Thursday, September 4, 2003

Beijing — China politely but firmly told Treasury Secretary John Snow on Wednesday that it would let its currency float freely when the time is right, but not in response to U.S. demands.

Snow had hoped that private talks with Chinese officials would persuade them to revalue the country’s currency, the yuan — also known as the renminbi, or “people’s money” — which is pegged to the U.S. dollar.

U.S. manufacturers — including many in Wisconsin — and others say that China has intentionally undervalued the yuan, giving Chinese exports an unfair advantage and costing U.S. jobs.

The nation’s largest industrial association, the National Association of Manufacturers, has complained that the artificially low value of the yuan is a major reason for the loss of several million U.S. manufacturing jobs in recent years.

But President Bush is being careful not to antagonize China, which is helping in the war on terrorism and also is playing a mediating role in nuclear talks with North Korea.

In Washington, the White House pledged to continue pressuring China to revalue its currency.

“We will continue to encourage the Chinese authorities to move toward freer trade and capital flows, and a market-determined exchange rate,” White House spokesman Scott McClellan told reporters.

But China said its exchange rate is good for both the Chinese and world economies, and letting it float now could do more harm than good.

“Maintaining the stability of the exchange rates of the renminbi benefits both China and the United States,” the official Xinhua News Agency quoted Chinese Premier Wen Jiabao as telling Snow. “This system accords with China’s reality, and it also shows that China is highly responsible to the international community.”

The yuan has been fixed at about 8.28 to the U.S. dollar for about a decade. The Chinese allow it to fluctuate, but only in small increments — typically a fraction of 1%. Despite the enormous size of China’s economy, the yuan is not traded on world markets.

After meeting with the Chinese finance minister and central bank governor, Snow said he was heartened to hear China will move toward a more flexible exchange system and eventually allow its currency to float freely.

“The objective here is to get China to move toward a free- floating currency,” Snow said after two days of meetings in Beijing. “I was encouraged to see Chinese leaders reaffirm that goal.”

He added: “I was assured that interim policy steps are now being taken and progress in this area will continue.”

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