Gov't pushes yuan stability after slide

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'China will maintain economic and exchange rate stability,' Chinese commerce minister Chen Deming said Wednesday at a forum in Xiamen.[Xinhua]

"China will maintain economic and exchange rate stability," Chinese commerce minister Chen Deming said Wednesday at a forum in Xiamen.[Xinhua]

The Commerce Minister said that the country needed to maintain exchange rate stability as the yuan continued its two-week long slide.

"China will maintain economic and exchange rate stability," Chinese commerce minister Chen Deming said Wednesday at a forum in Xiamen, Southeast China's Fujian Province. "The yuan's exchange rate is determined by market forces, and China will continue to carry out the exchange reforms."

The yuan closed lower against the dollar at 6.7907 per dollar Tuesday down from Monday's 6.7799 per dollar. The People's Bank of China set the reference rate 0.16 percent weaker at 6.7907 per dollar, the lowest rate since August 12.

The yuan has risen about 0.5 percent against the dollar since China unpegged its currency June 19 and Chen said the currency's fluctuations are "within a normal range."

The Chinese currency has gained over 20 percent against the greenback since the currency reform was announced in July 2005.

Many US exporters and politicians complained that China is manipulating its currency to make its products cheaper in order to gain advantages in exporting.

Over the past 18 months, there has been a large rebound in the country's trade surplus, which reached as high as $28.7 billion in July, fueling the criticism from the US.

But Chen said that China hoped to see a smaller trade surplus this year compared to the $196 billion in 2009, but that it has been larger than expected so far, partly because of falling commod-ity prices.

"External pressures can't influence the yuan, which will remain basically stable as China moves toward its goal of a more flexible exchange rate," said spokeswoman Jiang Yu with the Chinese Ministry of Foreign Affair Wednesday.

Premier Wen Jiabao said Wednesday during his talks in Beijing with Larry Summers, head of the US National Economic Council, that the two countries need to respect each other's core interests and not view each other as rivals.

The meeting was a week before American lawmakers are scheduled to hold a hearing to discuss China's exchange-rate policy. "Strategic trust is the basis of China-US cooperation," said Dai Bingguo, a State councilor, at the meeting.