China Currency
www.ft.com/ By Geoff Dyer in Beijing
China pushed back on Tuesday against mounting US criticism of its currency policy, saying that the country’s trade surplus was not the result of its exchange rate and warning the US not to “politicise” the issue.
“The trade imbalance is not something that the exchange rate can resolve and politicising exchange-rate issues is counterproductive to global efforts in tackling the financial crisis,” said Yao Jian, spokesman for the Chinese commerce ministry at a briefing.
He was speaking the day after more than 100 members of the US Congress signed a letter calling on the Obama administration to label China as a currency manipulator, an indication of the rising pressure in the US to take a tougher line with China.
"The impact of China's currency manipulation on the US economy cannot be overstated. Maintaining its currency at a devalued exchange rate provides a subsidy to Chinese companies and unfairly disadvantages foreign competitors," the letter said.
The US Treasury Department must decide by mid-April if it believes China is manipulating its currency, and with China giving little ground and political tensions rising in the US, some analysts are warning that the chances of this dispute ending in a trade war are rising.
Speaking at the weekend, Premier Wen Jiabao said that the Chinese currency was not undervalued and that foreign efforts to pressure China into strengthening the renminbi amounted to protectionism, although he did say that China would push ahead with reforming its exchange rate system.
Mr Yao’s comments underlined the tough tone that has been adopted in recent days over the currency issue in response to rising criticism in the US.
“We hope that in surmounting the crisis and reviving its economy, the United States should be a promoter of free trade, not an obstacle to it," he said.
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However, Mr Yao said that China was also working to improve investment policies for foreign companies following a growing number of complaints by multinationals about the business climate.
Chen Deming, the commerce minister, had met with a group of foreign businessmen in recent weeks and planned to address some of the criticisms he had heard, Mr Yao said. "The ministry has gotten both positive and other feedback," he said
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