China Balks At Significant Yuan Appreciation
September 20, 2011
In response to renewed criticism from U.S.
lawmakers, Chinese officials say they will not allow the yuan
to rapidly increase in value against the dollar, further intensifying an
ongoing international trade debate. China's
retort, released through the country's official Xinhua
news agency in an editorial, also effectively accuses the U.S.
of not taking responsibility for its own economic struggles. "China
will not blindly, because of pressure from a bill in another country's
congress, let its currency rise," Xinhua said.
For several years, U.S.
officials have maintained that China
deliberately undervalues the yuan in an attempt to
give its companies an unfair price advantage in global trade. Last week, U.S.
Senate Democratic Leader Harry Reid said lawmakers will try to soon pass
legislation aimed at forcing China
to stop holding its currency below market value. The Xinhua
editorial said Reid has "stepped into a serious mistaken zone" regarding
the yuan. "The high unemployment rate in the U.S.
is rooted in its own sluggish economy and must be solved by itself," Xinhua said
In the Xinhua article, China
said it intends to keep its currency at a "reasonable and balanced"
level, arguing a significant rise would hurt the global economy. Since China
ended a de-facto peg of its currency to the dollar last June, the yuan has appreciated by a total of 6.75%. China's
decision to allow the yuan to rise in value is part
of a stepped-up effort to curb inflation in the Asian superpower. A stronger yuan also translates into rising prices on goods imported
lawmakers have been threatening to punish Chinese exports with tariffs since
2005, no legislative action has been taken. Last year, the U.S. House of
Representatives passed a bill that would have levied extra duties on Chinese
goods, but the measure was never approved by the Senate.