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Saturday, 20 March 2010
China official warns of risk from yuan rise
A Cabinet official said a further rise in China’s currency risks driving exporters out of business, a newspaper reported Friday, as Beijing stepped up a war of words with Washington over its exchange rate controls.
A Cabinet official said a further rise in China’s currency risks driving exporters out of business, a newspaper reported Friday, as Beijing stepped up a war of words with Washington over its exchange rate controls.
Vice Commerce Minister Zhong Shan said the profit margin on many Chinese exports was less than 2 percent and a rise in China’s yuan after 2005 forced many companies to close, The Wall Street Journal reported. It said Zhong made the comments in an interview Thursday ahead of a visit to the United States.
Washington and other trading partners say China keeps the yuan undervalued, giving its exporters an unfair price advantage and swelling its trade surplus. But Beijing has resisted pressure to ease controls and says a steady yuan has helped global stability.
Some U.S. lawmakers are pressing for sanctions if Beijing fails to act and want President Barack Obama to declare China a currency manipulator in a Treasury Department report due out next month. That could set the stage for a World Trade Organization complaint.
Zhong compared the precarious situation of Chinese exporters to water that is about to boil, the Journal said.
“Water doesn’t boil if it is heated to 99 degree Celsius (210 degrees F). But it will boil if it is heated by one more degree,” he said. Likewise, “a further rise in the yuan by a very small magnitude might cause fundamental changes” to exporters in China.
Premier Wen Jiabao on Sunday denied the yuan was undervalued. He promised exchange rate reforms but said the currency will be kept at a “stable and balanced” level.
Other officials have rejected suggestions that China’s trade surplus with the United States was due to exchange rates. A Commerce Ministry spokesman said this week criticism over currency would not help efforts to end the global crisis.
Beijing allowed the yuan to rise by about 20 percent beginning in 2005 but has held its value steady since late 2008 to help Chinese exporters compete abroad.
Obama vowed last month to “get much tougher” with China in trade disputes and to press for an end to currency systems that he said depressed export prices.
Analysts expect Beijing to allow the yuan to rise gradually later this year but say Chinese leaders might be reluctant to take action if they might be seen as giving in to U.S. pressure.
China’s central bank governor, Zhou Xiaochuan, said this month that the currency measures would be withdrawn “sooner or later” but said Beijing will act cautiously because the global outlook is still uncertain.
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China official warns of risk from yuan rise
AP
19 March 2010
A Cabinet official said a further rise in China’s currency risks driving exporters out of business, a newspaper reported Friday, as Beijing stepped up a war of words with Washington over its exchange rate controls.
Vice Commerce Minister Zhong Shan said the profit margin on many Chinese exports was less than 2 percent and a rise in China’s yuan after 2005 forced many companies to close, The Wall Street Journal reported. It said Zhong made the comments in an interview Thursday ahead of a visit to the United States.
Washington and other trading partners say China keeps the yuan undervalued, giving its exporters an unfair price advantage and swelling its trade surplus. But Beijing has resisted pressure to ease controls and says a steady yuan has helped global stability.
Some U.S. lawmakers are pressing for sanctions if Beijing fails to act and want President Barack Obama to declare China a currency manipulator in a Treasury Department report due out next month. That could set the stage for a World Trade Organization complaint.
Zhong compared the precarious situation of Chinese exporters to water that is about to boil, the Journal said.
“Water doesn’t boil if it is heated to 99 degree Celsius (210 degrees F). But it will boil if it is heated by one more degree,” he said. Likewise, “a further rise in the yuan by a very small magnitude might cause fundamental changes” to exporters in China.
Premier Wen Jiabao on Sunday denied the yuan was undervalued. He promised exchange rate reforms but said the currency will be kept at a “stable and balanced” level.
Other officials have rejected suggestions that China’s trade surplus with the United States was due to exchange rates. A Commerce Ministry spokesman said this week criticism over currency would not help efforts to end the global crisis.
Beijing allowed the yuan to rise by about 20 percent beginning in 2005 but has held its value steady since late 2008 to help Chinese exporters compete abroad.
Obama vowed last month to “get much tougher” with China in trade disputes and to press for an end to currency systems that he said depressed export prices.
Analysts expect Beijing to allow the yuan to rise gradually later this year but say Chinese leaders might be reluctant to take action if they might be seen as giving in to U.S. pressure.
China’s central bank governor, Zhou Xiaochuan, said this month that the currency measures would be withdrawn “sooner or later” but said Beijing will act cautiously because the global outlook is still uncertain.
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