China yuan warning ahead of US currency report

[samuel]

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15 October 2010 Last updated at 18:21

China yuan warning ahead of US currency report Countries including the US have accused China of keeping the yuan artificially low The US should not use the weak yuan as a "scapegoat" for its own economic problems, a Chinese government spokesman has said.

At a regular briefing, commerce ministry spokesman Yao Jian said China would continue to reform its currency policy, but at its own pace.

The US government has delayed a report - which was expected on Friday - which could officially brand China a "currency manipulator".

Despite criticism, the US has so-far stopped short of that formal move.

The US Treasury Department is required to release two reports a year on the currency practices of its major trading partners.

The last report, due in April, was eventually delayed for nearly three months and did not accuse China of manipulating its currency.

The latest publication is not expected until after a meeting of G20 leaders next month.

'Unreasonable' criticism

The US has not made that claim since 1994, when China was named by the Bill Clinton administration.

Many analysts believe China is keeping the yuan artificially low in order to help its exporters compete in global markets.

Earlier this year China promised greater "flexibility" in its currency approach, but since then the yuan has only risen slightly in value.

Mr Yao said China would continue with currency reforms, but the speed of reform would be based on China's domestic economic situation.

He also rejected as "unreasonable" fresh criticism from the Japanese finance minister Yoshihiko Noda.

The longer this war continues, the greater the collateral damage will be for other economies, caught in the crossfire”

Mr Noda has joined calls for China to do more to allow the yuan to rise, and said the threat of currency wars was likely to be a significant issue at the up-coming G20 meeting.

But Mr Yao said Japan had "no reason, no grounds and [was] not qualified" to criticise China's currency policy.

Japan has currency worries of its own, with the Japanese yen currently hovering around 15-year highs against the dollar.

Five-year plan

Mr Noda has said the government is ready to take further "decisive steps" to curb further rises in the yen, after earlier interventions in the currency markets appeared to have little impact.

Earlier Japan's prime minister Naoto Kan also admitted he was "very concerned about the currency situation".

Growing criticism of China's currency policy comes as the country's Communist Party leaders meet to outline their next five-year economic plan.

The focus is likely to be on maintaining China's current rapid growth, which currently relies heavily on exports.

Officials will look at ways of boosting domestic demand from Chinese consumers in an effort to rebalance the economy.

[samuel]

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24 October 2010 Last updated at 12:12 GMT

Geithner says China is 'committed' to revaluing yuan Mr Geithner's meeting with the Chinese vice-premier was arranged at the last minute US Treasury Secretary Timothy Geithner has said he believes China is now "committed" to allowing the yuan to go up in value.

Mr Geithner made the comment in a TV interview before he held talks with China's Vice-Premier, Wang Qishan.

The US has long said China keeps the value of the yuan artificially low to make its exports more competitive, something Beijing denies.

On Saturday, G20 finance ministers said they would refrain from such tactics.

G20 summit agrees to reform IMF G20 ministers resist US pressure Currency battles threaten growth Mr Geithner met with Mr Wang in the Chinese port of Qingdao, following the G20 meeting in South Korea.

A US official said the two sides "exchanged views on US-China economic relations", but did not reveal any of the details.

Mr Geithner had earlier told Bloomberg Television that the Chinese "need the flexibility to run their policies in a way that makes sense for China".

He added: "And that requires that their exchange rate move up over time as they're now doing and we want to see that continue.

"They've got a ways to go, but I think they're committed to do that."

'Gradual appreciation'

Mr Geithner's visit to China came after a last-minute invitation from Mr Wang.

On Saturday, the treasury secretary said the G20 meeting had agreed that a "gradual appreciation" in the currencies of major trade-surplus nations was required.

Mr Geithner added that if the global recovery from the economic crisis was going to be successful, there needed to be "more balance in the pattern of global growth".

"This requires a shift in growth strategies by countries that have traditionally run large trade and current account surpluses, away from export dependence and toward stronger domestic demand led growth."

"This entails a range of policy changes, as you can see in the very broad range of domestic reforms being undertaken by China."

Earlier this year, China promised greater "flexibility" in its currency approach, but since then the yuan has only risen slightly in value.

Many in the US say the yuan remains undervalued by as much as 20%.

The G20 finance ministers meeting in the South Korean city of Gyeongju also agreed to changes at the International Monetary Fund (IMF), giving major developing countries more of a say.

US President Barack Obama and Chinese President Hu Jintao are expected to meet at G20 leaders' summit in the South Korean capital Seoul, which takes place on November 11-12.

President Obama is scheduled to attend, but President Hu's attendance has yet to be officially confirmed.