Ministry: US expectations for yuan appreciation "unrealistic"

11:19, April 08, 2010

Yuan appreciation will not spur the U.S. economy, reduce China's trade surplus with the United States or rebalance the global economy, said Yao Jian, spokesman of China's Ministry of Commerce in a recent interview.

Trade protectionist actions against China have emerged recently. On March 15, over 100 US legislators called on the Obama administration to label China a "currency manipulator" and levy a punitive tax on products imported from China. The public worries that Sino-US trade ties may be uneasy in 2010.

'Basically balanced'

Yao noted that China and the United States are currently each other's second largest trade partners. The two sides' dependency on one another has risen in 2009, despite the impact of the global financial crisis.

"It indicates that the development of Sino-US economic and trade cooperation is in line with the two economies' internal demand," Yao said.

By the end of 2009, the United States was the forth largest investor in China, with over 58,000 U.S.-funded enterprises set up in China and total investments in excess of 60 billion U.S. dollars.

U.S. enterprises can be found in 29 categories of China's manufacturing industry and 100 services sectors that China promised to open, including banking, insurance and securities institutions. In 2009, U.S.-funded enterprises realized $153.2 billion of sales revenues in China, accounting for two-thirds of their total revenues.

"Sino-US economic and trade ties are basically balanced and mutually beneficial," Yao said.

Say 'No' to protectionism

Last year, the United States launched 23 anti-dumping, counteractive and special safeguard probes into Chinese products, and six Section 337 investigations. China's export value that was affected grew 800 percent from the previous year to around 7.6 billion U.S. dollars.

In the context of the global financial crisis, the United States' frequent trade restrictions against China were in fact an abuse of trade remedies, Yao said. He emphasized that joint actions to fight against trade protectionism are the current choice to stabilize and expand Sino-U.S. economic and trade cooperation.

The United States restricted the export of hi-tech products, which are the most competitive, and seeks to reduce trade deficits through trade protection actions and export of agricultural products.

"These actions won't work and won't be to the two countries' mutual benefit," Yao said. "Trade frictions are not in line with the two sides' interest, and will threaten the stability of global trade environment."

As to the United States' "Nation Export Initiative," Yao reiterated that a more balanced Sino-US trade relationship required expansion of United States' exports to China.

In 2009, the share of United States' exports to China increased 1 percent relative to the country's overall exports.

"We hope that the United States will take effective actions, including lifting export restrictions against China, to expand export of its competitive products to achieve a rational trade balance," Yao said.

U.S. egotism

Stable yuan exchange rate has contributed to the stability of Asian and global financial market, said Yao. It is unreasonable for some U.S. congressmen and other politicians to blame the yuan for the recession and high unemployment rate in the United States.

Yao said that trade imbalance should not be the reason to push yuan to appreciate because trade imbalance is the result of globalization and will continue to exist. The United States should advocate, rather than obstruct, the development of free trade, Yao said.

"Urging other countries to let their currencies appreciate to boost its export is egotistical," he said.

Yao pointed out that China has huge market potential and will improve its trade policies and expand domestic demand as well as its imports.

China will keep yuan basically stable at a rational and balanced level, and improve the managed floating exchange rate regime in a proactive, controllable and gradual way, said Yao.

"China will firmly hold its policies concerning yuan exchange rate issue, and the US should abandon their unrealistic expectations," Yao said.

By People's Daily Online