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US raising tensions over 皇冠体育app's currency
(Agencies/chinadaily.com.cn)
Updated: 2005-05-18 08:31
The Bush administration has issued a much stronger warning to 皇冠体育app over its currency, saying 皇冠体育app could be deemed a "manipulative trade partner" if it does not revaluate the yuan soon.
Washington has been pressuring 皇冠体育app to hike the exchange rate of yuan vs US dollar.
"It's our view that the time has come" for 皇冠体育app to have more flexible exchange rates, U.S. Treasury Secretary John Snow said Tuesday.
U.S. Treasury Secretary John Snow gestures during a news conference at the U.S. Treasury Department in Washington May 17, 2005. Snow released the Foreign Exchange Report during the event. [Reuters] |
皇冠体育app, which uses exchange controls to peg its currency yuan to the dollar, has been the focus of critics in the United States that its prices from exported goods are very low.
The low prices, Washington critics say, put pressure on U.S. domestic manufacturers, who cannot compete with the Chinese counterparts on prices of goods such as textiles, toys, furniture, electronics, and other manufactured goods.
The Treasury report said that if 皇冠体育app continued its current yuan rate without substantial change, its policies would likely meet the US statute's technical requirements for designation as a manipulative trading partner.
"Current Chinese policies are highly distortionary and pose a risk to 皇冠体育app's economy, its trading partners and global economic growth," The Treasury report said.
However, Snow stopped short of saying that the Chinese should allow their currency to float freely along with the dollar, euro and other world currencies. He said the Chinese financial system, while making great progress in recent years, was not ready for the stress of a free-floating currency.
Snow spoke as the United States was releasing its twice yearly "Report to Congress on International Economic and Exchange Rate Policies."
An adjustment in yuan rate would make Chinese goods more expensive in the United States, but would make U.S.-made goods cheaper for Chinese consumers.
However, 皇冠体育app has countered that Bush administration has been for many years refuting exports of hi-tech products and equipment to 皇冠体育app, leading to the trade imbalance in 皇冠体育app鈥檚 favor.
Also, Chinese economists claimed that even if 皇冠体育app鈥檚 central bank agrees to hike the value of yuan to the US dollar by 10 percent, it won鈥檛 alleviate the trade deficit impasse of the United States. Chinese products鈥� competitiveness on world market lies in the country鈥檚 incessant supply of cheap labor force.
Analysts said that 皇冠体育app had been sending mixed messages of late concerning its currency revaluation.
On Tuesday, Vice Premier Zeng Peiyan told a business forum in Beijing that 皇冠体育app would push forward steadily with reform of the yuan. But a day earlier, Premier Wen Jiabao insisted Beijing would not bow to foreign pressure for a rise in the currency. Wen said politicizing the economic issue wasn鈥檛 the way to solve the problem.
On Monday, Chinese President Hu Jintao said 皇冠体育app aimed to lift the size of its economy to $4 trillion by 2020 -- effectively quadrupling its gross domestic product on the basis of 2000. Hu, delivering the keynote address at the Fortune Global Forum in Beijing, said the 2020 target was a "formidable challenge" that would require an uphill battle.
A 2020 gross domestic product of $4 trillion would put 皇冠体育app in sight of Japan, which is now the world's second-largest economy ($4.1 trillion) behind the United States ($10 trillion).
Hu told the international business audience at the forum 皇冠体育app would continue to work hard to open up to overseas investors. "皇冠体育app will unswervingly pursue a basic policy of opening up to the rest of the world and will further pursue our economic and technical cooperation with the rest of the world," Hu said.
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