China welcomes delay to US report
A Chinese government economist said yesterday that the US decision to delay a contentious currency report did not mean Beijing will change the value of its currency any time soon.
US treasury secretary Timothy Geithner on Saturday postponed a report due out on April 15 that could have branded China a "currency manipulator" which in turn would ratchet up US pressure for a big appreciation in the yuan's value, which critics says is distorting trade flows.
There was no official reaction from China yesterday, where it was a public holiday.
"I believe this is a positive signal. At least the US side has created some room for further consultations and negotiations," said Huo Jianguo, head of the Commerce Ministry's think-thank, of the US decision.
"But I don't think there will be a yuan adjustment in the near-term. We need to see whether China's export recovery will be sustained and need to see whether companies can cope with a stronger yuan."
The US decision followed last Thursday's announcement that Chinese president Hu Jintao will attend a nuclear security summit meeting in Washington April 12-13. This seems to be a move to keep tensions over currency in check.
Mr Geithner said he would use meetings of the Group of 20 and a US-China "strategic dialogue" in Beijing in May to urge China to budge on the yuan, which President Barack Obama, many US lawmakers, and several economists say is kept artificially low, undercutting US competitiveness.
Analysts have said Beijing may feel freer to nudge up the yuan if Washington dims its spotlight on public demands. But it is too early for China to change its currency policy, a Chinese government economist said yesterday.
An official Chinese newspaper also stressed that Beijing may not be ready to flag swift currency concessions.
Several Chinese economists quoted in the overseas edition of the 'People's Daily', the official newspaper of China's ruling Communist Party, maintained that the yuan was not to blame for the US trade deficit. The economists appeared to have commented before Washington announced the postponement of the report.
"Trade deficits and surpluses are not created by exchange rates, and the renminbi (the yuan) is not undervalued," said the paper.
Beijing let the yuan rise 21pc against the US dollar between July 2005 and July 2008 before effectively re-pegging the currency near ¥6.83 to the dollar to help the economy through the financial crisis.
The US deficit in trade with China fell to $227bn (€168bn) in 2009 from a record $268bn in 2008, but the Obama administration is keen to lift exports and employment. (Reuters)