China denies yuan is undervalued

: 0 Comment(s)Print E-mail Shanghai Daily, May 4, 2012

Adjust font size:

Chinese Vice Premier Wang Qishan (2nd right, 1st row), US Secretary of State Hillary Clinton (center) and Treasury Secretary Timothy Geithner (2nd left) and other officials share a light moment as they gather for a group photo at the Diaoyutai State Guesthouse in Beijing after the opening ceremony of the fourth China-US Strategic and Economic Dialogue yesterday. [Shanghai Daily]

China denied that the yuan is undervalued and pressed Washington to ease controls on exports of high-tech goods on the first day of the China-US Strategic and Economic Dialogue in Beijing.

US Treasury Secretary Timothy Geithner urged China to let the currency strengthen and open its markets wider.

However, Trade Minister Chen Deming denied the yuan was undervalued and pointed to China's shrinking global trade surplus. China reported a US$5.3 billion surplus in March, down from a monthly level of at least US$15 billion for most of 2011.

"Given that China's global trade is basically balanced while running a surplus with the US shows that the exchange rate plays a minimal role in trade," Chen told reporters.

Geithner urged further appreciation of the yuan while acknowledging China's plan to overhaul its financial system to increase support for private enterprise and reduce special treatment for state-owned companies.

"The United States has a strong interest in the success of these reforms," he said.

"A stronger, more market-determined currency would reinforce China's reform objectives of moving to higher value-added production, reforming the financial system and encouraging domestic demand," he said.

The yuan has gained more than 13 percent over the past two years since China announced an acceleration of exchange rate reform. With the yuan standing at around 6.3 against the dollar, Chinese authorities said earlier that the yuan had approached a relatively fair value.

Chen renewed demands for Washington to ease export controls on more than 2,400 high-tech products. The US restricts sales of such "dual-use" goods with possible military applications.

He said the current trade imbalance between the two countries had mainly been caused by US restrictions on these products being exported to China.

He said it would be difficult for the two countries to achieve balanced trade if the US continued to maintain control over such a large variety of exported goods.

Chen urged the US to stick to its pledges and take timely action in relaxing its export controls.

"Currently, the fact is that the US has not only failed to relax export restrictions, but has instead tightened them in some areas," Chen said. "For instance, the US is now mulling loosening controls on exports of commercial satellites, but it has also stressed that the controls will not be eased for China."

He added that a failure to remove export controls for China would be harmful to US companies and employment, as well as the US plan to speed up exports.

"I hope I will have enough patience and that this day of easing export controls will not be far off," Chen said.

Chen also attributed US business fears of a hard landing in China to "politicians and media hype" while urging the US not to erect barriers to Chinese investment on the grounds of safety.

Chen told a news conference he had noticed that some US businesspeople still had concerns about investing in China.

"On one hand, they worry about a possible economic hard landing in China. On the other hand, their fears are also a result of politicians and media hype," Chen said, pledging to continue to improve the country's investment environment.

The minister said some US companies had misunderstandings about China's investment climate. "China has promised not to use technology transfers as a requirement when approving foreign investment.

"We hope US companies will not view technology transfer demands during business negotiations as forced transfers required by the government," Chen said.

"The two countries do have a considerable diversity of opinions on some issues," said Shen Dingli, director of the Center for American Studies at Fudan University.

"That is why such dialogues are necessary to strengthen trust and dismiss doubts.

"To sustain a peaceful and robust development in Asia and beyond, China and the US must work more closely," Shen said.

The talks will end today.