China slams U.S. pressure on RMB exchange rate

10:28, June 15, 2010


China on Monday urged the United States political figures to stop blaming others for U.S. economic problems and to solve the problems themselves, as pressure on the Renminbi exchange rate mechanism builds.

"It's unreasonable to politicize the RMB exchange rate issue or engage in trade protectionism against China under the guise of the exchange rate issue. Doing so will only harm both sides," Foreign Ministry spokesman Qin Gang commented in response to some U.S. politicians' remarks on the Renminbi exchange rate issue.

U.S. Treasury Secretary Timothy Geithner said at a congressional hearing last Thursday China's refusal to revalue its currency impedes global economic reforms -- even as he highlighted the importance of U.S.-China trade and hailed the recent growth of Chinese imports of U.S. products.

Some U.S. congressmen have said they will soon push for a trade sanctions bill targeting countries "whose currency exchange rate is not equal to fair value."

"We agree with the remarks China-US trade is very important. The trade is mutually beneficial and win-win in nature," Qin said.

China does not intend to pursue trade surpluses and is actively increasing its imports from the United States to push for sound and balanced trade ties, he said.

In the first quarter of this year, U.S. exports to China surged by 50 percent year on year but less than 20 percent to other regions, according to Geithner.

"A lot of facts prove the RMB exchange rate is not the major cause of imbalanced China-U.S. trade," Qin said.

There has been no remarkable change in the U.S. trade deficit with China even as the yuan has appreciated 21 percent against the U.S. dollar since China began reforming the RMB exchange rate formation mechanism in July 2005.

Qin attributed the trade imbalance to the international division of labor, economic globalization, and U.S. restrictions on high-tech exports to China.

"The appreciation of the RMB will not solve the trade imbalance or U.S.'s problems like its low savings-rate, high rate of debt-based consumption, and high unemployment rate," Qin said.

The Chinese government will constantly improve the formation mechanism of the RMB exchange rate to maintain basic stability at a reasonable and balanced level.

The principles for improving the formation mechanism include: independent decision-making, controllability and graduality.

The Chinese government also insists on a managed-float exchange rate system that takes market supply and demand its basis, Qin said.

"As to the question of when and how, we will make decisions according to China's and the world's economic situation," he said.

Source: Xinhua