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Business

China rejects US accusations on yuan

Text by News Wires

Latest update : 2010-06-12

China defended its foreign exchange policy on Saturday, dismissing as "baseless" a call by US lawmakers who say China keeps the yuan undervalued, making exports cheaper and leading to job losses in the US and a ballooning trade deficit.

AFP - China on Saturday again defended its foreign exchange policy, dismissing as "baseless" a call by US lawmakers for a probe into the impact of alleged Chinese currency manipulation on American industry.

Facing election-year pressure, US lawmakers from both sides of the political aisle have vowed to launch legislative action within weeks to punish China over its currency policy.

They say China keeps the yuan undervalued, making Chinese exports cheaper and leading to massive job losses and factory closures in the United States and a ballooning trade deficit.

In a letter to Commerce Secretary Gary Locke this month, they sought a ruling on whether Beijing's currency policy provided an "unfair subsidy for Chinese paper products that should be remedied through trade measures."

But Chinese commerce ministry spokesman Yao Jian on Saturday warned using trade measures to pressure Beijing could violate international trade rules.

"The WTO regulates trade policies, not financial or foreign exchange policies," he said.

"The yuan issue falls outside the WTO's remit."

US Treasury Secretary Timothy Geithner, under fire for delaying a Treasury report to Congress due in April that could have labelled China a currency manipulator, said Thursday Beijing's refusal to revalue its currency impeded global economic reforms.

But Yao said a yuan change would not solve the US trade deficit and that China was actually propping up global recovery through a surge in imports to the country.

The latest US trade data Thursday showed the US deficit with China expanded by 14.3 percent to 19.3 billion dollars in April.

Last year, the deficit rose to a whopping 227 billion dollars.

China injected some flexibility into its currency in 2005 following US pressure, but when the global financial crisis erupted in 2008, it repegged the yuan to around 6.8 to the dollar.

Date created : 2010-06-12

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